Thursday, 3 September 1998

Reservation Losing Appeal as Economy Expands


The concept of the melting pot has held social analysts in thrall.
Multi-ethnic countries such as the U.S. have been characterised
as places where this concept applies. However, an examination
of the reality, even in the U.S., will bring out that rather than a
'melting down' of different ethnic groups into a homogeneous
mix, there is a coexistence—sometimes placid, sometimes tense-
of different groups. There is, in other words, very little melting
taking place in the pot.

This parallel development of different ethnic strands exists
not just in the racial sphere, but in the cultural as well. In the U.S.,
for instance, the statistical readings for variables such as unwed
mothers, drug addiction and illiteracy are significantly different
for groups such as, WASPs (White Anglo-Saxon Protestants),
African Americans, Asian Americans and Hispanics. These create
invisible barriers in the all-important business sphere, where
WASPs do much better than either African Americans or

India, too, is a congeries of ethnic groups, and here—despite
the frequent use of the 'melting pot' analogy—the mingling of
communities (through, for example, marriage) has been the
exception. However, unlike the U.S., this country has a well-
developed affirmative action policy implemented through the
mechanism of reservations. As a consequence, previously
disadvantaged groups have increased their representation in
administration, while sub-groups within them have reached the
stage of social take-off. This fact has been taken note of by the
judicial directive that the 'creamy layer' within the backward
communities be excluded from the benefits of reservation.

While affirmative action for the backward classes took deep 
root in the southern states of Tamil Nadu, Kerala and Karnataka, 
the forward castes retained their dominance in the Hindi- 
speaking states. A Karpoori Thakur or a Ram Sundar Das could 
do very little to dent the hold of the forward communities in the 
administrative machinery. However, the situation has changed 
with the coming to power of the SP-BSP in Uttar Pradesh and the
Janata Dal in Bihar. While within both regimes there is a
jockeying for positioning between different backward
communities, on one issue all such communities are united, and
this is on keeping the forwards out.

Why is it that four years ago, when V. P. Singh pulled the
Mandal rabbit out of his Kashmiri cap, there was such an outcry,
while today-when the backward class movement has become
such more strident—there is relative calm? The difference may
be a result of the liberalisation process set in motion in 1991. The
central motif of the entire process has been the steady
downgrading of the governmental apparatus as a system of
employment generation and decision making. Till 1991, it was
taken as axiomatic that growth in government was socially
beneficial. Very seldom were the hidden costs of such growth
examined. Indeed, few realised that the chronic inflation of the
currency and the anaemic performance of employment generating
units was linked to the expenses of maintaining a state structure
that, in many of its parts, was functionless.

Granted, the Narasimha Rao government has lost some of its
earlier reformist zeal. In particular, progress in the privatisation
of PSUs and reduction of subsidies has been slower in 1993-94
than the steps taken in 1991-92 would have led one to predict.
But, by placing on governmental units the onus of proving their
usefulness—rather than taking it as given—and by reducing the
flow of subsidies to loss-making units, the government has
helped generate a paradigm shift in social attitudes. Today, as
compared to 1990s, the sons and daughters of the middle classes
are far less likely to see their future as employees in a government
unit. On the contrary, these days the 'best and the brightest'
gravitate to the private sector, where rewards follow performance
more closely.

This displacing of the public sector by private industry as the
main engine of growth and employment has reduced the
significance of the Mandal formulations in middle class lives.
With the share of the state shrinking in the total employment pie,
the disadvantage caused by reservations will also be reduced.
Indeed, an argument can be advanced that those communities
which do not enjoy the benefit of reservation may actually find
their comparative positions improving, in that they will tend to
avoid the (declining) state sector and flock to the (growing)
private segment. An example of this is Tamil Nadu, where, from
1967 onwards the Dravida movement began to squeeze out the
Brahmin community from administration. As a consequence,
many went into business and thrived.

Why is it that the question of reservations has generated
much less friction in the three southern states compared to the
Hindi belt states? The reason could lie in the fact that the latter,
because of their statistical dominance in Parliament, had till 1991
enjoyed a flood of government investment. Even today, the role
of the organised private sector is less significant than the
governmental one in most of the Hindi belt. Whether as a
policeman or as a village officer, employment in the state
machinery is still a respectable option in the region. As a
consequence, any reduction in this due to reservations will be
contested. The reply to this is not (the politically impossible task
of) ending reservations, but creating conditions in the Hindi belt
for a faster growth of the private sector, a sector which is not the
parasite of the state sector, which itself is a parasite of the

For this to happen, standards of governance—especially law
and order—will need to be significantly improved. Unhappily,
such a process does not as yet seem to be occurring. Neither
Mulayam Singh Yadav nor Laloo Prasad Yadav are noted for the
high quality of their governance. By concentrating on getting
benefits from the shrinking govemment cake, rather than on
building up systems for private sector expansion, both of them
are—albeit unwittingly—blotting their political futures, for only
economic expansion will generate the conditions needed for
them to retain their popularity.

The danger in the populism seen in these two states is that,
on seeing that the governmental goose is no longer generating
sufficient political rewards, a cry may go up to extend reservations
to the private sector as well, thus killing the golden goose. So
long as reservation is confined to the state sector, the disincentives
inherent in it will not in themselves be sufficient to weaken the
pace of economic expansion. However, should it be forced on the
private sector, the negative effects could abort this country’s
nascent attempt to enter the economic major leagues.
What then is our defence against such a contingency? The
same as has acted as a bulwark for the liberalisation process. This
is the emergence of the first pan-Indian class, which is the Indian
middle class.

The process of economic expansion has created a class of
individuals who are ’at home' in most of the larger cities of India,
whether it be Calcutta or Madras or Bombay.
Should this development proceed, the middle class is likely
to be the country's largest voting bloc, rivalling farmers or even
the backward classes in number. The significance of this is that
this class, being very economics-centred, is likely to support that
political grouping which promises economic growth with
reasonable price stability. The future may, after all, be with
Manmohan Singh rather than with Mulayam Singh. 

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