Local-Only Quota Will Hurt Investment and Migrant Workforce Sentiments Political analysts often suggest that these moves are made to attract votes
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The Karnataka government announced the move to introduce a local quota with the 'Karnataka State Employment of Local Candidates in Industries, Factories, and Other Establishments Bill, 2024,' which has been met with criticism from industry players and the opposition. According to the new bill, the state mandates a 50 per cent quota for managerial positions (administrative and technical jobs) and a 70 per cent quota for non-managerial positions (clerical posts, including skilled, semi-skilled, and unskilled positions) in most private sectors for the local population. Additionally, to qualify as local, one must be born in Karnataka, have lived there for 15 years, and speak Kannada.
Sameer Nigam, CEO and co-founder of PhonePe, has strongly criticized the Karnataka government's proposed bill. He posted on his X handle, "I am 46 years old. Never lived in a state for 15+ yrs. My father worked in the Indian Navy. Got posted all over the country. His kids don't deserve jobs in Karnataka? I build companies. Have created 25000+ jobs across India! My kids dont deserve jobs in their home city?"
I am 46 years old. Never lived in a state for 15+ yrs
My father worked in the Indian Navy. Got posted all over the country. His kids don't deserve jobs in Karnataka?
I build companies. Have created 25000+ jobs across India! My kids dont deserve jobs in their home city?— Sameer.Nigam (@_sameernigam) July 17, 2024
Shame.
This bill poses higher risks for several industries, including e-commerce firms, startups, IT and ITes companies, and global capability centers (GCCs). According to Nasscom data, the tech sector contributes 25 per cent to the state's GDP. Since these sectors employ large numbers of people, there are warnings that investments will dry up due to such protectionist measures.
"The technology sector has been crucial to Karnataka's economic and social development, with Bengaluru known globally as India's Silicon Valley. It's deeply disturbing to see this kind of bill which will not only hamper the growth of the industry but also impact jobs and the global brand of the state," Nasscom said in a statement.
What About the Migrant Workforce?
The migrant workforce plays a key role in several sectors such as construction, manufacturing, and services, significantly contributing to the state's economy. Still, Indian states attempt to bring local quotas that can adversely affect employment scenarios and the economy. Companies hire from colleges and vocational training graduates, and such laws could halt job fairs and mass recruitment drives if firms are required to offer roles only to certain sections of candidates. Political analysts often suggest that these moves are made to attract votes. However, such bills and laws led firms to migrate from one state to another state. Such scenarios hit economic growth and employment.
"Nobody has the right to a job. You must compete. You must upgrade your skills, and you cannot say, 'I am a local, I am entitled to a job.' It cannot happen anywhere in the world. Jobs are not an entitlement. I do not think anybody can make a statement that 'I am born here, I am entitled to a job,'" said Mohandas Pai, Chairman of Aarin Capital.
Other than Karnataka, several Indian states have already tried their luck with local-only quotas. In 2019, the Andhra Pradesh government introduced a similar bill, followed by the Telangana government, which introduced a 100 per cent reservation for local candidates. In 2020, the Haryana government introduced a 75 per cent reservation for local candidates in all private sector jobs. In 2021, Jharkhand also introduced a 75 per cent reservation for local candidates. Interestingly, all these states' bills were challenged against Articles 14 and 19 and could not be implemented. There is a high possibility that the Karnataka bill will go through the same route.
Following the backlash, Karnataka CM wrote on his X handle that "the draft bill intended to provide reservations for Kannadigas in private sector companies, industries, and enterprises is still in the preparation stage. A comprehensive discussion will be held in the next cabinet meeting to make a final decision."
The draft bill intended to provide reservations for Kannadigas in private sector companies, industries, and enterprises is still in the preparation stage.
— Siddaramaiah (@siddaramaiah) July 17, 2024
A comprehensive discussion will be held in the next cabinet meeting to make a final decision.
Shashi Tharoor, a former Union Minister and current Lok Sabha member representing Thiruvananthapuram in Kerala, said such laws could drive businesses to neighboring states like Tamil Nadu and Kerala. "This bill was not a wise decision. If every state brings such a law, it would be unconstitutional. The Constitution guarantees every citizen the right to live, work, and travel freely in any part of the country," he further added.
