Untouchable and unthinkable

This article is also from the latest edition of the Economist.
Unlike the previous one (which was somewhat balanced) - this article takes a strong anti reservation stand.
The article is available here and at AFP.

Oct 4th 2007
From The Economist print edition
Hiring quotas would not help lower-caste Indians and would harm business

BUSINESSES in India are used to bad government. Indeed, this hardship has proved perversely useful: through coping with rotten infrastructure, throttling labour laws and mutable investment policies, many world-class Indian companies have emerged. A proposal to force firms to hire more workers from the dregs of Hinduism's caste system (see article) would be different. It would be a disaster.

India's long history of affirmative action springs from decent instincts. The caste system is possibly the world's ugliest social system. And it is sanctified by India's largest religion: according to the Laws of Manu, an ancient Hindu text, anybody from the lower orders who has the temerity to mention the name of a higher caste should have a red-hot nail thrust into his mouth; if he makes the mistake of telling a brahmin what to do, he gets hot oil poured into his ears and mouth.

Fortunately, India has moved on a bit since then. But socially and economically the place is still sharply stratified. Upper castes get a far larger share of good jobs than do lower castes; dalits—or untouchables—get virtually none. Which is why, soon after independence, India's government used affirmative action to try to redress the balance; and why calls for that action to be extended to business are so loud.

Affirmative action necessarily has a cost, both in fairness to those who in its absence would qualify for jobs and educational opportunities that they are denied, and consequently in efficiency. Still, if it went a long way to righting a big historical wrong, that might be justifiable.

But that hasn't happened in India. Nearly a quarter of university places and public-sector jobs have been reserved for dalits and tribal people since 1950; and, in 1993, a successor government handed a further quarter over to “other backward classes”. Yet there is no evidence that this has made any difference to the fortunes of the lower orders. They have certainly been getting richer—but, over the past two decades, at almost exactly the same rate as the rest of the population.

What's more, the policy has had dangerous side-effects. Cynical politicians promise their fellow caste members more jobs and university places. Reservation inflation has therefore been on the rise, infuriating the losers. As a result, battles over reservations have become a common source of riots, and politics has thus become increasingly polarised along caste lines.

Extending into the private sector a policy that has been a disaster in the public sector is lunacy. This must be clear to India's prime minister, Manmohan Singh. As finance minister in the early 1990s, he started dismantling a system of industrial quotas, thus unleashing the economy. He should understand better than anyone the likely effect of introducing a quota on people. Yet he has been threatening to impose penalties on companies that don't hire more low caste workers.

Don't blame business

Reservations in companies would not just damage business. They would also distract attention from the real source of the problem. Responsibility for lower castes' lack of advancement does not lie with the private sector. There is no evidence that companies discriminate against them. The real culprit is government, and the rotten educational system it has created.

Originally, reservations were supposed to be needed only for a decade. After that, it was reckoned, they would be unnecessary, because primary education would be universally available. Nearly six decades on, it is not. And the quality of much of India's higher education is execrable. By one reckoning, only a quarter of engineering graduates, the raw material of a booming computer-services industry, are employable. The government should concentrate on sorting out schools and universities, not piling new burdens on business.

There's another effective weapon against ancient prejudices: growth. As Indians get richer, their caste biases fade. Middle-class urban Indians are less likely to marry within their caste than the rural poor, and less likely to wrinkle their noses at a dalit. Happily, the ranks of the middle class are swelling in a fast-expanding economy—for which India has its businessmen to thank. Hobbling them with quotas will only make it harder for them to help the country change.