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Haryana is Reserving Private Jobs for State Locals - All You Need to Know

Editor, TRANSFIN
Mar 6, 2021 10:08 AM 5 min read
Editorial

On March 2nd 2021, the Haryana government notified a law that brings into effect the criteria of reserving 75% of private jobs in the state (with a monthly salary ceiling of ₹50,000 ($686)) for the locals. 

The law, named the Haryana State Employment of Local Candidates Act, 2020, gives in-principle effect to a policy of state domicile in employment. It has received wide criticism and political scrutiny from many circles, most importantly from the industrial corridors who are now facing penalties up to ₹2L ($27,457) for violating the provisions of the Act. Some have even equated the law's enforcement to a recall of "inspector raj" in the state. 

Let us see what lies at the centre of this much-hyped and headlined piece of legislation.

A Review of the Law 

The law has a 10-year life span (for starters). In November 2020, the Haryana state assembly passed this bill which applies to all companies, societies, trusts, limited liability partnership firms, partnership firms and any person who employs 10 or more people. The domicile status applies to those people who were either born in the state or have been living there for at least 15 years. 

There is, however, an exemption under the law which may apply to a company if it is able to cite unavailability of adequate number of local candidates for positions that require desired skills, qualification or proficiency. But, in order to avail the exemption, a company must secure the approval of a "designated officer" who is tasked with the case-by-case assessment of the situation. 

Aside from the elaborate red-tape machinery that awaits the approval process, the officer may also choose to reject the application if he believes that the vacancies can be filled by providing appropriate training to eligible local candidates. 

The law is essentially a manifestation of the electoral promise made by the Deputy Chief Minister's party before the 2019 elections that was eventually adopted into the BJP-JJP coalition government's common minimum programme. 

Privately-managed companies and immigrant job-seekers stand to receive the maximum disadvantage. The auto industry, in particular, which has a sprawling presence in Haryana and has brought investments worth ₹400bn ($5.5bn) to the state and employed over a million people, IS positioned rather precariously. Industry bodies including FICCI, Assocham, NASSCOM, ACMA, CII etc. have come out in open resistance against the law and advocated an immediate revision from the government. 

 

How Unprecedented Is the Law? 

Not at all, it would seem. Among the states which have contemplated bringing in similar domicile reservations (and done so successfully, in some cases) are Andhra Pradesh, Maharashtra, Madhya Pradesh, Telangana, Jharkhand, Karnataka and Uttarakhand.

The data released by the Centre for Monitoring Indian Economy (CMIE) on March 1st 2020 showed that Haryana had the highest unemployment rate in the country at 26.4%. Even if one could understand this as a push towards domiciled employment, there is no backing up this logic in situations where qualified professionals are withheld from recruitment to fill up positions from locals in a three-fourth quota ratio. 

As per 2011 Census (last available data), only 56 million people in India (4.4% of the population) were shown to live outside their state of birth. Unless interstate migration numbers skyrocketed immensely within the past decade, the concern of migrants stealing jobs from locals in states like Haryana is redundant. 

Also, the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), a government agency is tasked with clearing industrial permits only after they submit an affidavit stating that they will employ people from the state. So the question is, how does the new law supercede the existing one? (This is, of course, keeping in mind that the penalty under the new law carries a maximum fine of ₹2L ($27,457) opposed to the punishment for the violation of the HSIIDC code - perjury for lying on an affidavit - is a sentence of seven years!) 

So, the idea that interstate migrants might be taking away jobs from locals on a large scale is reductive at best. 

Some states (Maharashtra, Andhra Pradesh etc.) are also considering proposals to impose district-level quotas for locals. It is, perhaps, safe to say in this context that the will to manifest a nativist agenda at the cost of micromanaging corporate employment decisions is very unwise. 

 

The Test of Legality 

Article 14 and Article 16(2) are in direct contravention with the new law. Equality before law and equal treatment under the law in matters of public employment are staring down the face of domiciled employment in government situations, let alone in private companies, which have been categorically targeted by this policy. 

Politically, job reservation on domicile lines has lately turned into a fad symbolising economic populism. Although we have constitutional provisions for reservation in employment for individuals from socially and economically backward communities, drawing those in parallel to residence in a state seems absurd. 

To be fair, there is precedent for arguing that geographical classification may qualify as a socio-economic backwardness if applied to particular areas which are remote or economically isolated. That could call for reservation in public or private employment. But even the Supreme Court described this argument as a sweeping generalisation with "provincial overtones" which wouldn't stand the test of constitutionality. The Court has had a history of striking down any policy which calls for preferential employment of certain classes where the distinction is on the basis of any criteria apart from economic or social backwardness (i.e. SC/ST/OBC/gender).

 

The Cost of Economic Integration 

Labour markets in India are still at the nascent stage of regulation. Economic integration between states took a massive step with the advent of GST. However, if reservations on the basis of domicile continue to take cue from one state to another, it will set back such integration to a great extent. 

In addition, it eludes us from issues like failure to create jobs in the first place. The widespread neglect and underinvestment in education and skilling which contribute to migration and consequent job appropriation from the locals are the more intrinsic problems that merit resolution. Domicile-based reservations ultimately erode the economic consolidation among states creating "states within states" in a sort of Balkanised fashion. Affirmative action has to originate from meaningful fiscal reforms, not out of the barrel of legislative coercion. 

FIN.

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