The Zero Sum Bill

Context: Domicile-based preferential policies (Haryana’s State Employment Local Candidates Bill 2020) indict the economy as a whole, suggesting a pessimism about both education and job creation.

Background:

• Haryana’s State Employment of Local Candidates Bill 2020: reserves 75% of new jobs in private establishments under a compensation threshold of Rs 50,000 for Haryana residents.

Issues with domicile-based reservation policies of state governments:

• Violates constitution:
  • Constitution prohibits discrimination based on place of birth (Article 16).
  • It provides citizens with right to move freely in the country and reside and settle in any part of it, and carry out any trade or profession (Article 19)
  • Only parliament (and not states) has the power under Article 16(3): to provide for domicile-based preferential treatment in public employment.
• Against judicial pronouncements: In Pradeep Jain vs Union of India and Kailash Chandra Sharma vs the State of Rajasthan, the court has warned concerned states against it.
• Contagion of domicile-based preferences: This kind of constitutional cynicism is now not an exception but has become a contagion.
  • Similar actions by other states: like Andhra Pradesh (75% reservation), Karnataka (trying to reserve all blue-collar jobs for locals), Madhya Pradesh (public employment for state residents).
  • Fuels the flames of localism: even if it is struck down by courts in due course (as Shiv Sena had demonstrated in the1970s).
• Exposes the bad faith of political parties on private sector reservation: As it may result in the form of expropriation in addition to interference with freedom of trade and business.
• Gives rise to competitive ethnic politics: the action of Haryana (part of a cosmopolitan zone NCR) may trigger Uttar Pradesh (Noida) and Delhi to restrict workers from Gurugram.
• Class discrimination: as Haryana bill provides rich, privileged or highly skilled freedom to access any labour market but put entry barriers on lower-skilled migrants.
• Uncertain economic consequences:
  • Due to gaps in the bill -> (one can apply for an exemption if there is not enough local talent).
  • The fines for non-compliance may allow companies to absorb the cost of violation
• Gives discretionary powers to states: may lead to a form of license permit raj where companies will have to bargain or bribe the state for exemptions which is the antithesis of regulatory reform.