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Indian Economy

On July 24, the Andhra Pradesh legislative assembly passed the AP Employment of Local Candidates in Industries and Factories Bill, 2019, that mandates employment of at least 75% state candidates in the respective units. The “local” reservation, a poll promise of chief minister, Jaganmohan Reddy, will extend to industries, factories, joint venture units, and projects taken up under public-private partnership initiatives. Mr Reddy is not the first CM to take such a retrograde step. Similar promises have been made by Gujarat chief minister, Vijay Rupani, and, more recently, by Madhya Pradesh chief minister, Kamal Nath. While Maharashtra did not promise or enact such a law, politicians such as Maharashtra Navnirman Sena chief, Raj Thackeray, has often made scathing attacks on migrants from Uttar Pradesh and Bihar and demanded that young people from the state should be given priority if there are any job opportunities in the state.

It is not too difficult to figure out the reason for such demands. India’s agriculture is in crisis, and there is a serious dearth of jobs in manufacturing. While one appreciates the challenging situation, reservation is not the answer to the problem. It may, instead, be a counterproductive move. Moreover, such laws go against the constitutional rights of Indians to live, work, and settle in any part of the country. In fact, there are scores of studies that show migration is good because it brings skills that are otherwise probably unavailable in a particular state, and also improves the economic condition of the people in the home state because, as economist, Chinmay Tumbe, puts it evocatively, “Remittances from all these places flow all through the year to thousands of villages and small towns, much like the tributaries of the river Ganga”. Besides the financial aspect, who can deny the importance of cultural and social interaction in a country as spectacularly diverse as India?

More importantly, such a law discourages the private sector. A company will think twice to set up its industry in a state that put these kinds of restrictions, instead of investing in the basic building blocks of a citizen: health, education, and skill training. An educated, healthy and well-trained citizen is always an asset, and any industry will be keen to employ people based on these parameters rather than where she lives/comes from.

First Published: Jul 28, 2019 18:06 IST

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