By creating expectations about reservations in the private sector, the Congress has raised the stakes in competitive populism to new heights. The left parties have not lagged behind in demanding their pound of flesh from the capitalist class. Whatever the similarities may be in the social and political consequences of reservations in the public and private sectors, their legal and constitutional implications are bound to be very different.
Reservations in the private sector will mark a new departure in the making of public policy. All policy-making requires the balancing of conflicting aims and interests, and the policy of reservations is no exception. The policy of caste quotas in employment was devised by the colonial administration, and first applied in peninsular India in the early twenties of the last century. The colonial policy was driven by two different objectives: the political objective of creating a new balance of power and the humanitarian objective of promoting equality and social justice. The nationalist leadership, which at that time took a negative view of caste and communal quotas, was not prepared to credit the colonial administration with any humanitarian objective, and saw the quotas as part of a policy of divide and rule.
Opponents of caste quotas in the colonial period had hoped that they would be scaled down after independence. Instead, they have been scaled up. It cannot be that the British advocated caste quotas only on political grounds and the leaders of independent India advocate it only on humanitarian grounds. Many now feel that political considerations have been uppermost in the extension of caste quotas since the time of the Mandal Commission of 1979-80. But the movement for reservations would not have had such continuing success if it did not strike a chord in the hearts and minds of those who yearn for greater equality and social justice.
Simply because it is widely believed that caste quotas reduce inequality, it does not follow that they in fact do so. Inequality has many different faces. It is not easy to determine whether inequality overall has increased or decreased in the last 50 years, leave alone the contributions made by different factors to its increase or decrease. But to say that the social effects of the policy of reservations are difficult to measure is not to imply that it has had no social effect.
Perhaps the most durable effect of the policy is its contribution to a change in the social composition of the Indian middle class. The colonial administrators who introduced the policy did not see beyond the middle class; they were certainly not trying to create a policy for the revolutionary transformation of Indian society. It is not a very convincing argument that scaling up caste-based reservations further by extending them to private employment will lead to a radical transformation of the social structure.
Despite its undeniable social and political significance, the middle class comprised a relatively small section of the Indian population at the time of independence. It has become much larger and much more differentiated in the last fifty years. It is now important not only socially and politically, but also demographically. The middle class grew first with the expansion of the public sector and then with the opening of the market. A large and vibrant middle class, equipped with professional, administrative, managerial, technical and even clerical skills and abilities, is an asset to any society and indispensable to a constitutional democracy. And the more diverse the middle class is in its social composition, the more effectively it is likely to play its political role.
It has to be emphasized that the expansion and diversification of the middle class has come about through the operation of a number of different factors. State actions in general and preferential policies in particular have undoubtedly made their contribution. In both absolute and relative terms, there are many more members of the scheduled castes, the scheduled tribes and the other backward classes in the Indian middle class than there were fifty years ago. At the same time this diversification would not have taken place without far-reaching changes in the economy, and it cannot be sustained if it is pursued as an inflexible policy without attention to the demands of the economy.
It may be a good thing for private firms to have managers, technicians, office assistants and others from a wider rather than a narrower range of castes and communities. Some companies may wish to change their strategies of recruitment in that direction in their own long-term interest. But it is difficult to see how in a political system that protects private property and the freedom of enterprise the state can dictate to a private company the nature of the social composition of its employees. It can, at best, encourage companies to adopt socially sensitive strategies of recruitment by offering them tax concessions and other incentives. And companies can make their own contribution by creating facilities for the education and training of talented individuals from socially disadvantaged communities.
In reviewing the legal and constitutional aspects of preferential policies, it is essential to keep in mind the distinction between mandatory and enabling provisions. Mandatory provisions, like the one relating to the reservation of seats in the Lok Sabha under Article 330 of the Constitution, are those that must be applied. Enabling provisions, like the one under Article 16(4) relating to reservations in employment, are those that may be applied, depending upon conditions and circumstances. Enabling provisions are necessary where preferential policies may be challenged on the ground that they appear inconsistent with other provisions, such as those relating to equality of opportunity.
The Indian policy of reservations has often been compared with the American policy of affirmative action, but the differences are deeper than the similarities. In the United States of America, even when the environment was most favourable to affirmative action, the provisions for it were enabling and not mandatory. The state did not order or instruct the University of California or the University of Michigan to have preferential policies. The universities made their own provisions and then pleaded with the courts to allow the provisions to stand, arguing that they did not violate any basic principle of law. The Indian situation is quite different. Reservations in education and employment operate through orders of the government prescribing numerical quotas, which the US courts would never uphold.
In India, supporters of preferential policies have acquired the habit of thinking only in terms of numerical quotas and mandatory provisions. But the government cannot impose on firms and companies its own preferences regarding the social composition of employees on private contract without violating basic legal and economic principles. On the one hand, the government wants to free the economy from the control of the state so that it can work according to economic, and not bureaucratic, principles. On the other, its initiatives on reservations in the private sector will lead to the control of hiring and firing to an extent not contemplated even in the heyday of the command economy. Hiring and firing can be either regulated by the market or controlled by the state. It is difficult to see how both things can be done at the same time.