Proposed Reservation for Locals Policy in Karnataka

In the last week of December 2016, the Karnataka state government had released the draft amendments to Karnataka Industrial Employment (Standing Orders) Rules of 1961. This amendment, which is currently under perusal of the state law department, aims to provide 100% reservation for Kannadigas in private sector industries (except IT-BT sector) across the state for certain categories of jobs.

Definition of Kannadiga

The Labour department of Karnataka state defines Kannadiga as local people born in the state or one who has lived in the state for not less than 15 years and knows to read, write, speak and understand Kannada.

Industries Included in Proposed Law

The proposed amendment will be applicable to all industrial establishments which have obtained government concessions of land, water, electricity, tax rebate or deferment of tax as per Industrial Policy. If the industries don’t follow the law, government may cancel all the concessions to them. The new law will not cover IT-BT {Information Technology, Bio-technology} sector because these have not been covered by the Karnataka Industrial Employment (Standing Orders) Rules of 1961 for a period of five years from 2014.

Jobs which get the proposed reservation

The proposed policy provides 100% reservation for locals for seven different categories identified in the existing law including permanent, probationers, baldish, temporary, casual and apprentices. These are group C and D (blue collar) jobs mostly. Apart from that, the proposed law also puts 5% reservation for disabled persons.

Questions & Answers

The above amendment is a proposal right now and will come into force once the government notifies new act. At present,  our opinion must be formed in the light of below questions:

• Is the policy good or bad? Should we welcome it or oppose it?
• What can be implications due to its impact on labour mobility.

Is the policy good or bad? Should we welcome it or oppose it?

There is no doubt that intention of this policy is not to create divisions on the basis of caste, creed or religion but is to provide employment opportunities for the local population. If we have a look at industrial units in Bangalore, we find that very low number of locals work there. While the state government gives  the industries concessions and rebates, it has the prerogative to ask the industries to recruit local people at the lowest rungs of employment. Thus, the policy must be welcomed. But then, 100% reservation is something which might cause problem later on. When you are asked to recruit all the people from local only, you may loss revenue because you are not able to utilize the readily available labour from other states. It will have thus, negative impact on labour mobility.

What can be implications due to its impact on labour mobility?

In our country, a large number of blue collar job seekers leave their home states in search of employment in other states. This is in consonance of article 301 of the constitution, which makes trade, commerce and intercourse free within the territory of India. The benefit of labour mobility is that labour market cost remains competitive. When a government fiat blocks this, it will simply render the market noncompetitive and will result in loss of revenue and production efficiency for the industries. That is the reason that 100% reservation seems to an impractical regulation and surely would be challenged in court. Currently, there is a 50% cap on reservation in public sector, and this policy does not seem to have been drafted aptly to defy such legal challenges.