Globalisation and its discontents, in Haryana

From January 15, 2022, a law giving 75% reservation for local residents in private sector jobs will come into effect in Haryana

From January 15, 2022, a law giving 75% reservation for local residents in private sector jobs will come into effect in Haryana. To be sure, the policy will only apply to jobs where the monthly salary is up to ₹30,000. The announcement has already triggered a rethink among IT companies currently located in the state, said a Business Standard report published on November 9. The policy appears to be an example of myopic populism, which could ultimately harm the economic prospects of the state. However, simply classifying it as that does not take into account the context behind the political economy of such decisions. Haryana is not the only state to implement or consider bringing such laws. Maharashtra, Karnataka, Andhra Pradesh, and Madhya Pradesh are other states that have brought in such laws. Here are four charts that explain the political rationale behind them.

The skyline view of Cyber City, Cyber Hub and Gateway tower building, in Gurgaon, India. (Parveen Kumar/HT File Photo)

Gurugram, the symbol of aspirations and exclusion in Haryana

In 2002, Joseph Sitglitz (he received the Nobel Prize in economics in 2001) wrote a book called Globalization and Its Discontents. The book drew on Sitglitz’s experience as the chairman of the council of advisers to US President Bill Clinton and his term as the chief economist of the World Bank, and questioned the then entrenched dogma about the efficacy of Washington Consensus policies in promoting growth and well-being. Two decades since Stiglitz wrote his book, the discontent vis-a-vis globalisation has percolated from policy debates to the real world. Protectionism and populism are increasingly dominating politics across the world as it becomes clear that only a fraction of people have gained from the policies of globalisation. Gurugram is one of the best-case studies of this phenomenon.

If one were to make a list of things that capture the transformation economic reforms have brought about in India, the city of Gurgaon or Gurugram, as it is known now, will probably be in the top five. What was a small town in the Aravalli foothills is now the abode of corporate India, especially companies in new-age sectors such as IT services, finance, and now startups. The rapid expansion of the corporate footprint has also led to an explosion in the white-collar workforce in the city. Most of this high-skilled workforce has come from outside the city, even the state, and in some cases outside India.

While Gurugram’s growth did bring some capital gains for the local residents – land prices shot up as private builders started acquiring land for real estate development – those gains were skewed in favour of the landed elite and are mostly over now.

For the average Haryanvi, Gurugram is both a symbol of aspiration and exclusion. There are far too few high-paying salaried jobs in the rest of the state compared to Gurugram, and the ones in Gurugram aren’t available to many locals. This gap is even bigger if one looks at the status of workers in rural Haryana. It is this aspiration and sense of exclusion which the policy is seeking to address by reserving private sector jobs for locals.

How important is a job with ₹30,000 per month in income in India?

There are no official income statistics in India. So, this question has to be answered in a roundabout way. The latest Periodic Labour Force Survey (PLFS), the official source of employment statistics in India, was conducted in 2019-20. Because PLFS follows a July-June calendar, the last quarter of 2019-20 PLFS coincided with the 68-day-long national lockdown which began from March 25, 2020. This means that the 2019-20 PLFS numbers will show an abnormal picture on the employment front. If one looks at the 2018-19 PLFS, out of an estimated workforce of 355.83 million in India, only 15.58 million had monthly incomes above ₹30,000 per month. 73% (an estimated 11.39 million) of the jobs with incomes more than ₹30,000 per month were salaried jobs. These numbers explain the attraction for salaried jobs in India.

To be sure, PLFS might not give a true picture of income statistics in India, as most National Sample Surveys tend to undercount the rich in India. For the assessment year 2018-19 (latest available data for these statistics), 34.19 million income tax returns filed reported gross total annual income more than ₹3.5 lakh, the closest annual equivalent of ₹30,000 per month. 20.53 million returns, which is double the estimates of PLFS, reported annual salary income more than ₹3.5 lakh.

Regional inequality in high-paying jobs in India

Not only are relatively well-paying jobs scarce in India, they are also skewed regionally. Data from PLFS shows this clearly: 38.5% of the salaried jobs which pay ₹50,000 or more are concentrated in just Delhi, Maharashtra, Andhra Pradesh, and Tamil Nadu. This number decreases to 31% if one looks at salaried jobs which pay only ₹30,000 or more per month. In most big states, less than 5% of the workforce earns more than ₹30,000 per month.

Countering reservation politics through a different kind of reservation politics

It remains to be seen whether private corporations actually relocate from Haryana once the 75% reservation for local residents kicks in. However, what is also true is that by announcing this policy, the Bharatiya Janata Party (BJP) and Jannayak Janta Party (JJP) government in Haryana might have dodged a political bullet on the issue of Jat reservations. Jats, the most influential peasant community in the state, have been demanding other backward classes (OBC) status in the state for some time now.

There were large-scale riots during a movement for Jat reservations in the state in February 2016, leading to large-scale loss of life and property. With a (Jat-dominated) farmers’ agitation threatening to hurt the BJP-JJP, the latest announcement on 75% reservations for locals – this will benefit both Jats and non-Jats – might help the ruling coalition without antagonising its larger support base among the non-Jat population.