Wednesday, November 10, 2004

Reservations for Dalits as CSR?

Sukhdeo Thorat
10 November 2004

Why the reservation policy?
The policy of reservations in the public sector is being used as a strategy to overcome discrimination and act as a compensatory exercise. A large section of the society OBCs was historically denied right to property, education, business and civil rights because of the practice of untouchability. In order to compensate for the historical denial and have safeguards against discrimination, we have the reservation policy.

The policy exists precisely because of the discrimination in the private sector in terms of civil and political rights, discrimination in markets, land and capital, education and social services. It’s a riddle as to why there should not be a reservation or anti-discriminatory policy in the private sector. Some kind of an anti-discriminatory policy for the private sector is a necessity.

In countries like the US, the Affirmative Action Policy was started in 1964 after the enactment of the Civil Rights Act. It’s the same story for Northern Ireland, Malaysia, South Africa and Pakistan. Besides this, 52 countries have introduced reservations in the private sector. It’s only in India that the massive private sector is excluded from this policy. 70 per cent of those belonging to the Scheduled Castes live in rural areas that depend on agriculture and the rural non-farm sector that has no policy reservation but where discrimination abounds. Reservation ought to be extended to the private sector to correct the mistake we made in the 1940s.

It is wrong to say the reservation policy has not helped or that it is an irrelevant policy. These are wrong arguments given by the private sector. Reservation exists in government services, insurance, public sector undertakings, in educational institutions among the faculty and recruitment of students, and also in public housing. Then, there are finance corporations that provide finances to SCs and STs to start businesses.

The reservation policy in the public sector has benefited a lot of people. The Central government alone has 14 lakh employees. The proportion of Scheduled castes in class III and IV is well above the quota of 16 per cent and in class I and II, the proportion is around 8–12 per cent. So, the middle and the lower middle class that we see today from the Dalit community is because of reservation. With no reservation, the entry of these people in government services would have been doubtful.

The situation is similar in education. An article in the EPW (Economic and Political Weekly) estimates that there are seven lakh SC /ST students in higher education and about half of them are there because of reservation. Reservation has certainly helped but there are limitations in any policy with the way it is implemented. I would take the position that it has helped and should be treated that way.

The private sector has created a gross misunderstanding that the reservation policy is based on less merit. The entire reservation policy in India and elsewhere is based on the premise that it would recruit people with required qualifications. It is mentioned in the constitution that reservations for discriminated groups is subject to efficiency and that efficiency is judged by required qualifications. Therefore in class I and class II you have 8-12 per cent that is less than what is required because candidates are not available. Therefore it is a malicious propaganda by the private sector that reservation will affect merit and efficiency.

Tackling job scarcity
At the level of primary education, there is no discrimination on part of organizations. But the number of jobs and seats is less in comparison to the number of applicants. In such a scenario, private institutions should indulge in some kind of a discriminatory mechanism. The scarcity issue could be tackled by recruitments on the basis of merit. But this is not the case in the private sector, which makes reservation an essential policy.

The Indian labour market works in a discriminatory manner, in that it doesn’t recognise the qualification of the person but the person’s group identity. The conditions of caste and religion also come into play while making a selection. To counter this, countries like USA, Northern Ireland, South Africa, Malaysia, Thailand, China and Indonesia have adopted the Affirmative Action Policy or the anti-discriminatory policy.

Malaysia could be cited as the best example in the south Asian region where the Malays or Bhumiputras are a discriminated lot. In the 1970s when the Malays came to power through a democratic process, they introduced a comprehensive Affirmative Action Policy not only for education and employment but also for land ownership. A large chunk of land was reserved for the Malays. Reservation also includes share capital and equity done through a national trust that gives money to private corporations to treat it as equity capital on behalf of the Malays. The Malays’ stake in the company’s share capital has increased from 2 per cent to 30 per cent.

Though India has a SC/ST finance corporation, it grants capital only for small businesses. But we don’t have the provision for the possession of equity share through which one can influence employment and other policies of the company.

The present discussion on private sector reservation is limited and biased. We are only talking of labour market reservation and employment in certain sectors of the private sector economy. There is no discussion over capital market; private housing, land market and government contracts to the private sectors. Moreover, discrimination in the product market is discouraging Dalits from starting their own businesses. Studies have revealed that nobody buys milk from the low castes or the Valmikis. They are even excluded by the milk co-operatives. The policy should be that the government buys milk and vegetables from them. Wherever there is discrimination, there has to be a safeguard in order to provide fair access to everybody. The focus should not be on the labour market alone.

It is false propaganda to say the benefits of reservation have been appropriated by the relatively better off sections of Schedule Castes. Out of the 14 lakh government employees, class III and IV accounts for approximately 65 per cent of the total employees. Studies have shown that they are essentially children of agricultural landless laborers or construction workers. One can rightly question as to why an economically well off Scheduled Caste be given economic benefits like scholarships and other economic concessions as they don’t deserve.

But reservation in jobs is a different story as both - the rich and the poor suffer from discrimination because of their background. The capacity and ability of a relatively better off Dalit to fight against discrimination is much stronger that that of an agricultural labourer. Both suffer therefore both require protection. So, the whole debate put forth by higher caste academics is wrong. There is no Dalit academician to counter this argument, as the rise of the Dalit academician is a very recent phenomenon. These are all stereotypes created deliberately.

Skill building
There is a need to focus on education and skill-building capacity of the Dalits, but that is the case with everybody and not just the Scheduled Castes alone. Illiteracy is not just the problem of SCs and STs. Only 10 per cent of our labour force is skillful. Though it’s a problem in each sector, the Scheduled Caste problem is more severe. Everyone requires education and skills, but the Scheduled Castes require something more as they suffer from discrimination and exclusion in the labour market and also in private educational institutions.

They need additional safeguards to have a fair access to the market. A poor Brahmin’s problem would be confined to education because he is poor. But the issue would be resolved if he’s given an educational scholarship. Beyond that he will not face discrimination. On the other hand, a poor Scheduled Caste suffers from illiteracy as well discrimination, which doubles his problems, thus requiring a dual policy. Education and skill development for a Scheduled Caste is imperative, apart from some sort of a positive policy that provides a fair access to the market. Therefore it’s not unexpected that in 52 countries, in addition to the policy of economic and educational empowerment of the minorities, there is a policy of affirmative action or reservation. And this is a strategy against discrimination, which is not required by the poor yet non-discriminated group.

Because the Scheduled Castes are educationally backward and they also lack modern skills, the government should provide them access to skill building and education at a lower expenditure. The next step should be to ensure reservation in employment as the private sector discrimination being amazingly high, the Dalits are sure to loose out. Studies have been conducted that show that only 3 to 4 per cent of the positions in the private sector are appointed through open advertisements. Most recruitment in the private sector happens through informal channels as it is a cost-saving exercise. The private sector is completely lying when they say that we are appointing competent people. Efficiency requires transparency and a mechanism wherein you provide opportunities to suitable and qualified people. In the private sector what counts is a social network. An untouchable cannot approach this social network.

Therefore, the private sector is wrong in saying that it is going for efficiency. Rather it selects the best one out of a limited number of people. But it does not necessarily go for the efficient and the best one, as this requires advertising the vacancy.
According to the National Sample Survey, the unemployment rate amongst the Scheduled Castes is twice the unemployment rate among others. This is partly because they don’t have access to information. TS Papola, former Advisor to the Planning commission has said: “It is well known and documented that recruitment in the Indian industry is highly informal and personalized. Several methods have been adopted to hire workers in factories and enterprise, but most of them fell into the category of particular needs, implying that they were accessible only to a particular group of people. Channels of information and routes of recruitment were both mostly personalized and therefore available only to a few.”

The government and policy makers have to be informed about the various forms of discrimination being practiced against the Dalits. There is a need of an affirmative action policy that gives more visibility to the problems of discrimination through communication. Due to lack of information stereotypical opinions are being formed about the reservation policy. The issues have to be brought in the public domain to a greater extent.

Social benefits of reservation
Reservation has tremendous individual and social benefits. A study by Tilak in the early 1970s works out the returns of the reservation policy. If you help one scheduled caste person through reservation, or what you call as externalities in economics, then it can lead to a lot of social benefits as one person can elevate several members of his family. So the rate of social benefits in society is high. Another argument by the high caste academicians asserts that reservation would lead only to individual mobility. This is wrong as reservation has helped group mobility through individual mobility. Though there are very limited studies done over this, yet these have to be stressed. This aspect has to be studied to prevent the dissemination of false propaganda.

Scenario in other countries
There are similarities as well as differences. An amazing similarity is some sort of an anti-discrimination policy wherever minority groups are being excluded.

There are three remedies. Firstly a law exists to prohibit discrimination on the basis of caste, race, colour, ethnicity, nation and social origin. There are legally binding policies to safeguard against discrimination of different group identities. However, it has been widely observed that merely passing a law doesn’t necessarily prevent discrimination. Racial discrimination is rampant in the UK despite a law. Similarly, in Northern Ireland, Roman Catholics are discriminated by the Protestants. There is a law against ethnic discrimination in Pakistan yet there is Punjabi discrimination against the Baluchis and the Sindhis.

Secondly, these groups have been historically discriminated and denied opportunities. Therefore, in these countries, certain methods have been used to improve their participation in the economy, society and polity. The USA calls the quota system - target and numerical balance. Therefore,reservation and affirmative action policies are just a mechanism to provide a fair access to the discriminated.

Thirdly, the reservation policy only addresses the problems associated with current discrimination, but there are many communities that have been discriminated in the past. A 1901, Act prevented untouchables from owning land, which was repealed only in 1947. The result is that only 95 per cent of the Scheduled Castes in Punjab and Haryana are landless labourers. Therefore, compensation is used to correct this historical wrong all over the world.

Malaysia reserved large tracts of land for the Malays. Jews too have been given compensation. In India Mahars in Maharashtra, who are untouchables, were given a one time settlement in the form of Maharwatan land. The differences are in terms of the sectors - private or public, to which these policies are applied. For example, in Malaysia there is an Affirmative Action Policy (AAP) for land market, credit market, employment, education and foreign policy. In the US it exists for the public sector and governmental educational institutes. In the private sector only legal protection is provided rather than the AAP.

The method of implementing these reservation policies varies across countries. The Indian quota system is good, but is confined to the public sector. Similarly, in China a minority university has been set up to give proper participation to the 56 minorities in China.

The issue of private sector reservation came up because of the structural adjustment programme, or what we call the new economic policy, introduced by Dr Manmohan Singh in the July 1991 budget. This has led to de-reservation in a way. The 1948 Industrial Policy Act of the Government of India had 18 sectors in the public domain, which has now been reduced to four only. Fiscal deficit has reduced the number of government jobs. The privatization and liberalization strategy has put the spotlight on the reservation issue. This doesn’t mean that there was no demand. The SC/ST commission had asked for reservation in the private sector in 1964, which was raised again in 1971 under the leadership of Indira Gandhi.

The private sector talks of social justice and philanthropy but does not have many voluntary initiatives to highlight. The private sector has completely bypassed what is called corporate social responsibility. The United Nations has a provision for multinational corporations that they should follow a non-discriminatory policy in countries that they are active. There are 17 countries under this provision, which have given in writing to the UN that they would follow a non-discriminatory policy. This means that MNCs also are morally bound to follow a non-discriminatory policy.

Director, Indian Institute of Dalit Studies, Professor Sukhadeo Thorat, speaks on reservation for Dalits in the private sector. A professor of economics at the Jawaharlal Nehru University, Thorat has worked extensively in the areas of social exclusion, Dalit rights, farmers’ issues, rural poverty, problems of marginalized groups like the Scheduled Castes and Scheduled Tribes and the economics of the caste system.

Source: OneWorld South Asia, November 10, 2004

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