Not this Vocal for Local

Context: Job reservation for local residents is the latest fad in Indian politics since last year at least eight state governments have passed, or proposed, legislation to impose native quotas.

Different reservation proposal across states:

• Some reserve private sector jobs, some reserve state (public sector) jobs, while others reserve both.
• Some want to micromanage corporate employment decisions, proposing to fix district-specific quotas.

Issues with state and district level job reservations:

• Against creation of a single market: Fragmenting large labour market into 29-state and 718 districts level labour markets are bad economics and unconstitutional.

• The single and flexible labour market has helped in attracting investment, increasing employment opportunities, as seen in the European Union and the United States.
• The impact of Brexit on the British economy would be 2-3 times the impact of Covid-19.

• Decreases Ease of doing business: Reservations increase the hassles of doing business, and discourage domestic as well as foreign investment resulting in fewer jobs.
• Low interstate migration: India has an exceptionally low level of interstate migration as only 56 million people (4.4% of the population) lived outside their state of birth as per 2011 census.
• Already surpassed quota: In Maharashtra, 84% of the supervisory jobs and 94% of the non-supervisory jobs in major industries are held by locals.
• Limits demographic dividend: Local reservation will destroy the demographic dividend by fragmenting India’s large national reserve of young workers.
• Industries will have a limited pool of workers available to them within the district.

Conclusion: Passing legislation for job reservation is from increasing opportunities for the local youth and will turn investors away and lower economic growth and job growth.