A section of industry experts says the bill, if implemented, will drive businesses away from the state
The Karnataka draft bill to reserve jobs for locals in the private sector, which is now on hold, is unconstitutional and untenable, according to a section of industry experts. The draft bill seeks to reserve 70 per cent non-management jobs and 50 per cent management jobs for locals. Industry leaders say the move would be unconstitutional and impractical and would trigger businesses to leave the state if implemented.
“Corporates will move out of Bengaluru if this is implemented. Tamil Nadu and Telangana are waiting to welcome them,” says Mohandas Pai, chairman of Aarin Capital and former chief financial officer of tech giant Infosys.
On Hold For Now
The backlash has forced Chief Minister Siddaramaiah to put the bill on hold for now. “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,” he wrote on X Wednesday.
The Karnataka Legislative Assembly had cleared the bill on Monday (July 15). Officially called the Karnataka State Employment of Local Candidates in Industries, Factories and Other Establishments Bill, 2024, it proposes to reserve 75 per cent of C and D category jobs and 50 per cent of management category jobs for locals in the private sector.
The proposed legislation is in line with the Karnataka Congress’ 2023 election manifesto which promised to reserve 80 per cent jobs in both private and public sectors for locals. According to Pai, the bill, even if passed, will not stand the test of constitutionality.
Is Local Quota in Private Jobs Constitutional?
In January 2022, the Haryana government notified a similar bill—the Haryana State Employment of Local Candidates Bill, 2020 to reserve 75 per cent of new jobs for locals in companies, societies, trusts and limited liability partnership firms. But in November that year, the Punjab and Haryana High Court quashed the law ruling that it was illegal.
In May 2020, the Andhra Pradesh High Court struck down a similar law for the state. Pai says the Karnataka government’s move is “political” and is meant to “cover up the government’s failure to address the lack of jobs”. Experts say the government should focus on skilling and educating locals and not punish companies for hiring migrants.
Article 19 of the Indian Constitution that lays out the fundamental rights of citizens says every citizen has a fundamental right to move freely throughout India, reside or settle in any part of the country and practice any profession.
The bill appears to be unconstitutional and discriminatory, says Siddharth Chandrasekhar, advocate and counsel of the Bombay High Court. “An act which bars citizens from other states to obtain employment is against the foundational principles of the Constitution,” he adds. Chandrasekhar further says: “It is not advisable for a state to direct a private employer who it may or may not employ.”
Is it Even Possible To Implement?
Karnataka is one of India’s more prosperous states. With a gross state domestic product (GSDP) of over Rs 22.41 lakh crore, it contributes nearly 8 per cent to the country’s GDP. The state also has a higher per-capita income than its northern counterparts.
The per capita net state domestic product for Karnataka at current prices (2011–12) as on August 1, 2022 stood at Rs 2.78 lakh against Rs 49,470 in Bihar and Rs 68,810 in Uttar Pradesh. A large number of migrants move to Karnataka in the hopes of escaping grinding poverty.
“A vast majority of them [migrant workers] work towards the bottom-end of the spectrum in terms of job positions. An overnight displacement of so many people is impossible and untenable,” says Balasubramanian A, senior vice-president and business head at recruitment firm TeamLease services.
“The government needs to invest in better infrastructure and address issues such as water and traffic congestion in the state. Skilling programmes can help locals perform better,” he adds.