Why in News: –

  New Haryana Bill puts forth Domicile-based preferential policies that indict the economy as a whole, suggesting a pessimism about both education and job creation.

Syllabus: –

 GS-2: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

The Haryana Law: –

• The right to move freely in the country and reside and settle in any part of it, the right to carry out any trade or profession, is all established rights.

• The Haryana State Employment of Local Candidates Bill, 2020 requires private companies to set aside for domiciles 75% of jobs up to a monthly salary of Rs 50,000 or as may be notified by the government from time to time.
• The law is applicable to all the companies, societies, trusts, limited liability partnership firms, partnership firms and any person employing 10 or more persons and an entity, as may be notified by the government from time to time shall come under the ambit of this Act.
• In July 2019, the Andhra Pradesh government had passed a similar law, which was challenged in court.
• The Andhra Pradesh High Court had made a prima facie observation that the move might be unconstitutional, but the challenge is yet to be heard on merits.

 Criticism of the bill: –

1. First, the private sector cannot be subject to the same yardstick as the public sector; imposing reservation would not just interfere with freedom of trade and business, it might also be a form of expropriation.
2. Given the variety of parties now espousing domicile-based reservation, the argument that the “private sector” can be protected will be an argument in bad faith.
3. Arguably, the case for reservation for social justice is stronger than the case based on domicile.
4. Fourth, these bills will open up a new form of competitive ethnic politics. It is odd that a state like Haryana which has benefitted from being part of a cosmopolitan zone like NCR should unilaterally impose reservations.
5. Fifth, there is patent class discrimination: If you are rich, privileged or highly skilled, there are no entry barriers in accessing any labour market. But we shall put entry barriers on lower skilled migrants; our own internal version of an H-1B visa.
6. Sixth, the greatest damage the Bill does is to increase the discretionary power of the state, almost taking us back to a license permit raj, where companies will have to bargain, or worse, bribe the state for exemptions. This is the antithesis of regulatory reform.

General Issues:

1. Even if the Bill is struck down, such a high wire act is meant to fuel the flames of localism. As the Shiv Sena had demonstrated in the ’70s, political parties can bring formal and informal pressure to bear on industries and enterprises, once you make preferential treatment of residents a wedge issue.
2. Second, the Bill now exposes the bad faith of political parties on private sector reservation more generally.

 Examples:

1. Andhra Pradesh has mandated 75 per cent reservation for locals;
2. Karnataka is toying with the idea of reserving all blue-collar jobs for locals;
3. Madhya Pradesh has announced that public employment in the state be reserved for state residents.
4. The last time there was such a contagion of domicile-based preferences was in the 1970s, when states such as Maharashtra, Tamil Nadu, Andhra Pradesh issued circulars directing employers to hire local residents.

Supreme Court Judgements: –

1. In Pradeep Jain vs Union of India, the court had indicated this direction;
2. In Kailash Chandra Sharma vs State of Rajasthan, the court had warned against parochialism.
3. The Andhra Pradesh Bill is sub judice in the high court.

 The Legal Issues: –

Two big legal questions come up.

1. Domicile reservation in jobs – While domicile quotas in education are fairly common, courts have been reluctant in expanding this to public employment.
2. In 2020, the Madhya Pradesh government decided to reserve all government jobs for “children of the state”, raising questions relating to the fundamental right to equality of citizens.
3. Issue of forcing the private sector to comply with reservations in employment – For mandating reservation in public employment, the state draws its power from Article 16(4) of the Constitution, is not adequately represented in the services under the State”.
4. The Constitution has no manifest provision for private employment. By decreeing that only Parliament had the right to make exceptions, Ambedkar ensured that such rules would not be enacted, simply because Parliament would favour uniform rules across India.

 The Government’s Rationale

1. Providing reservation in public employment is one of the many ways through which the state endeavours to ensure equal opportunity for all citizens.
2. With public sector jobs constituting only a minuscule proportion of all jobs, legislators wish to rope in private sector to really achieve the same constitutional mandate.
3. Private industries use public infrastructure in many ways — from accessing land through subsidised allotment to receiving credit from public banks, tax exemptions and in many cases subsidies for fuel etc. 
4. So, the state has a legitimate right to require them to comply with the reservation policy.
5. A similar argument was made in requiring private schools to comply with the Right to Education Act, which the Supreme Court also upheld.
6. Similarly, in 2004, then Congress-led UPA government had taken the first step in this regard.
7. A Group of Ministers was constituted by then Prime Minister Manmohan Singh to examine the issue of affirmative action, including reservations, in the private sector by initiating consultations with industry leaders to have them voluntarily comply with the policy.

 Global examples: –

1. Affirmative action is adopted in many countries in the context of race and gender.
2. For example, in the US, although there is no statutory requirement for employers to have quotas, courts can order monetary damages and injunctive relief, including “such affirmative action as may be appropriate”, for victims of discrimination.
3. This power comes from the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of race, colour, national origin, religion, and sex.
4. The Employment Equity Act in Canada also protects minority groups, especially aboriginals from discrimination in federally regulated industries, even in the private sector.

 Way Forward: –

1. The bills militate against the ideal that any Indian should be able to countenance the prospect of making a life in any part of India.
2. Second, they reveal the fact that slogans of “One India” are weaponised, to be used when convenient. In some ways, 75 per cent reservation in private sector employment is a worse form of exceptionalism than other forms of asymmetric federalism like Article 370 that the BJP railed against.
3. The sociology of the Bill is also interesting: It seems to want to protect, not the most vulnerable workers, but the educated who cannot seem to be able to compete in a tight labour market.

Question: –

The Haryana State Employment of Local Candidates Bill, 2020 is constitutionally indefensible as the Constitution prohibits discrimination based on place of birth. Critically evaluate.