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Education & Skill bring real mobilty

India Inc strongly feels that job reservation in the private sector will hamper its growth and make it globally uncompetitive, writes Saikat Neogi.

india Updated: May 24, 2006 20:56 IST

India Inc strongly feels that job reservation in the private sector will hamper its growth and make it globally uncompetitive. In the words of Nasscom president Kiran Karnik who represents the India IT industry: "It will completely destroy the meritocracy in the private sector." Wipro chief Azim Premji argues that the people-dependent service sector has "no alternative but to hire the best talent available, within India or globally."

In 2004, Maharashtra passed a Bill to reserve 52 per cent of jobs in the private sector for backward castes. But the state government had to put it on hold as most corporates threatened to move out of the state, raising the spectre of large scale unemployment.

A joint study done by Cambridge, Ulster and North East Hill Universities highlights that government job reservation succeeded in raising the representation of SC and ST by just about 5 percentage points and the policy had little emphasis on improving the skills of the marginalised section. It concluded that the root of social mobility is education and augmentation of skill sets.

Educational conditions of SCs and STs are abysmal and drop out rates are as high as 80 per cent. A FICCI study points out that 40 per cent SC and 60 per cent ST vacancies remain unfilled in vocational institutes. It warns that job reservation without education and skill enhancement will be detrimental for the country's growth. Its remedy: A public-private partnership can improve education standard and develop skill sets of the marginalised communities.

Currently, 9 out of every 10 jobs created in India are in the informal sector. And even if the entire organised private sector, which employs just 2.2 per cent of the total workforce, is reserved for the backward castes, the gains will be just modest at a time when jobs in both public and organised private sector are shrinking.

Many reports and surveys, including those by FICCI and CII, have suggested that the instead of mandating job reservations in the private sector, the government should focus on promoting entrepreneurship. According to 1998 Economic Census, 45 per cent of all enterprises in both rural and ur ban areas are owned by SC/ST and OBCs. The Census also points out that though the growth of enterprises owned by STs has in creased marginally in the eighties and nineties, the growth of enterprises owned by SC declined significantly from 3.42 per cent to 0.4 per cent.

It has been pointed out by the industry as well as by academic institutions that lack of access to finance for the marginalised peo ple is a major hindrance in creation of self employment opportunities. Public sector banks face problem in servicing small cred its but CII's Affirmative Action plan sug gests that self help groups can design ap propriate financial products for banks and developing alternative methods of collater al. Under the US Affirma tive Action, the government provides loan guarantees to minority entrepreneurs and offers tax breaks.

One of the radical measures suggested by India Inc is a system of preference in government procurement and contracts to backward entrepreneurs in order to make them partners in the market economy. In the US, five per cent of all purchases made by the government come from suppliers belonging to minority communities. The law also binds all government con tractors to have a certain percentage of their work sub-contracted to minority sub contractors. Madhya Pradesh government launched a similar scheme to procure 30 per cent of purchases for ashrams and schools from Dalit entrepreneurs but it did not work because of lack of enforcement in struments.

Now while the debate continues over job reservation, some companies are already implementing affirmative action and vol untary recruitment of people from the backward communities. HLL, for example, has 12 per cent of its workforce from back ward castes. Similarly, about 50 students from the backward community are under going skill development training at Infosys' BPO arm Progen. Many other similar ini tiatives show that the government and in dustry can work together to achieve the goal of improving the condition of the de prived sections.