Reservations for Dalits as CSR?

Reservations for Dalits as CSR?

By Sukhdeo Thorat
OneWorld South Asia | 10 November 2004

[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.]

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

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
812 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

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

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.

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