The other half in the workforce

[A part of the cover story in People Matters, published in October 2011]

In a talent deficit environment,tapping women into the workforce represents a significant opportunity for growth and scale

The working-age population in the 15 to 64 age group in India is expected to increase from 780 million in 2010 to 915 million by 2020 and to a staggering 1 billion by 2030. More importantly, half of them would still be under the age of 28 in 2030. This broadly constitutes India's much trumpeted demographic dividend, which is often lauded as its competitive advantage over the long run. The demographic dividend story may be a good selling point while pitching for investments, but when seen through the statistics and reality of women at work, it paints a contrasting picture.

Considering the latest data released by the National Sample Survey Organization (NSSO) in terms of declining labor force participation by women over the last five years, it is apparent that the so called demographic dividend is an illusion when it comes to this half of the population. Statistics from the NSSO show that while labor force participation rates have fallen for both men and women, the decline in the rate is much sharper for women in the 15 to 59 age group. In the five years up to 2010, the work participation rate of women (both rural and urban) has been on a decline, coming down by 6% since 2004-05. Interestingly, in the decade from 2000 to 2010, the population of women aged 15 years or more increased by 86.5 million but only 8.9% of them joined the labor force. It is ironic that during a period of economic growth when, ideally, labor participation rate should have increased and as a result the dependency ratio should have decreased, the contrary holds true. Women form close to one-half of the human resources of the country and the sheer decline in work participation rate of this major chunk of human resource, poses serious concerns as it undermines India's demographic dividend theory.

The fundamental question - given the target of the 11th Five Year Plan to create 500 million skilled workforce by 2022 (by annually increasing the skill development capacity by 15 million) - is how will India achieve this target when the work participation of the "other half"; of the demographic dividend is declining?

Dr. Sonalde Desai, University of Maryland and NCAER, in her paper,"The other half of the Demographic Dividend" states categorically, “India is unlikely to realize its demographic dividend’ to the fullest extent unless significant strides can be made to increase women’s labor force participation through an increase in employment opportunities and a reduction in labor market disadvantages.” For India Inc, which is grappling with the problem of talent deficit and employability of candidates, the underlying message is the need for the creation of balanced gender-diverse workforce. Maybe, creating a gender diverse workforce is an opportunity for some to build scale in the near-term and differentiate from competition over the long run.

The "Gender Dividend"opportunity

As organizations become increasingly talent driven, the greatest hurdle they face is the lack of an employable workforce. Yet a majority of the organizations are underutilizing and in some cases, are downright ignoring the other half of the talent pool - women make up 42 percent of college graduates in India; Census 2011 pegs the effective literacy rate for females at 65 percent. As talent becomes the most valuable resource for business, it makes sense to invest in women, create levers for competitive advantage and leverage on the "Gender Dividend". With less than 25 percent of women in India as a part of the workforce (compared to 50 percent of men), they represent a huge untapped potential which can help bridge the talent deficit. In terms of numbers, organizations in India seem to be overlooking the 250 million women talent pool below the age of 30.

Reports from research bodies and media corroborate that women representation in the IT/ITeS workforce ranges between 24 to 26 percent at entry levels and gradually declines as one moves to middle, senior and board levels. For new age private sector banks women at the entry level form roughly 20 percent of the workforce. The TCS-People Matters Gender Inclusion Survey 2010-11, found that though women are relatively well represented in the services and the IT sectors, they are mostly concentrated at the entry levels. In the IT sector, 70 percent of the respondents claimed that they have between 15-30 percent of women in their total workforce, while in the finance sector 73 percent of the respondents claimed that the women share of their workforce was up to 15 percent.

There is no dearth of research which demonstrates that a gender diverse workforce in today’s talent deficit scenario is a sound business practice which bears a strong correlation to growth. A report by Future Capital Holding, ‘The impact of working women on India's growth, incomes and consumption; estimates that increasing women’s participation in the workforce could be one of the most powerful ways to boost economic growth, incomes and consumption over the long run. More women entering the workforce could make Indians 5 percent richer, than otherwise projected, by 2015 and 12 percent richer by 2025. The report states that consumption gains can be felt in financial services, educational services, retail and entertainment. The United Nations Development Program (UNDP) 2010 Asia Pacific Human Development Report cites that the country’s annual GDP growth rate could jump 4 percent if women participation rates were raised to 70 percent, closer to the rate of many developed nations.

The World Economic Forum's 2010 Global Gender Gap Index shows that the educational attainment gap has almost disappeared (in the Indian context the gap has reduced to 16.7 percent in 2011) but this is not translating into women being retained, developed, and advanced in the workforce. In fact these numbers look dismal. Despite two decades of economic renaissance, India is the worst among the 6 top Asian economies (including China, Hong Kong, India, Japan, Malaysia, and Singapore) when it comes to representation of women in the workforce at junior and middle-level positions, according to the Gender Diversity Benchmark for Asia 2011 Report. A comparison of percentage of women representation in total workforce shows that while China has the highest percentage of women represented in the total workforce (50%), followed by Malaysia (47%), Hong Kong (45%) and Singapore (43%); the lowest percentage of women are employed in India (24%), with Japan (37%) being the second lowest. Worse, at 48 percent, India has the most significant drop from junior to middle level positions. These numbers mean that the pipeline is either leaking or is stuck. Either way, it is not good for the bottom line. Churn has a steep price a conservative estimate of the cost of turnover for knowledge workers ranges in 200 percent of salary (Deloitte: The Gender Dividend –Making the business case for investing in women). Besides this, women are the Market; they roughly control $20 trillion of total consumer spending globally and the number is predicted to rise to $28 trillion by 2014. As businesses prepare themselves to serve a diverse customer base, a gender diverse workforce helps in understanding women as consumers and their impact on the bottom line.

There is no doubt that if India Inc is to meet its business objectives amidst the war for talent and talent crunch, it has to prepare itself in terms of scaling up its workforce and acquiring the right talent mix. Besides, they need to question as to how prepared they are in attracting and retaining this significant talent pool, where there is an equal risk of competitive attrition and of withdrawing from the workforce entirely. Failure to capture the full economic potential implicit in its demographic (gender) dividend could mean that either large number of prime-age talented individuals are unemployed, underemployed, or otherwise not constructively engaged.

Are women shying away from work?

Whatever the efforts by companies in attracting and retaining women it takes a beating when one analyses recent findings of NSSO; on the declining work participation ratio of women. While the data can be looked at from a positive perspective to conclude that the decline is primarily due to women choosing to educate themselves for longer periods instead of joining the workforce at the very first opportunity, other corollaries can neither be overlooked nor ignored. It is quiet intriguing that despite increasing levels of higher education in women and the talent crunch across industries, the women participation ratio in total workforce has declined. A number of socio-cultural and labor market factors could also be responsible for this.

The socio-cultural argument suggests that women's withdrawal from labor force is associated with advancement in the social status of the family. "Higher wealth-status families" choose to educate their daughters, but at the same time, restrict their independence with labor force withdrawal and ask them to conform to the paradigms of "ideal daughter/wife/mother/daughter-in-law"; While one can scoff about such social norms as the relic of another generation, a quick empirical survey conducted by People Matters among white-collared professionals indicates that such display of social status by means of female workforce withdrawal is still a wide-spread trend even in Tier-1 cities.

However, the hand of gender discrimination in earnings cannot be ruled out in reducing female employment. Indeed, women in India earn 53 percent of that earned by their male counterpart in the private sector and 73 percent in the public sector. The problem is further compounded by the lack of safety for women in public spaces in urban areas, something that inhibits them from working in jobs that demand longer hours or in industries that require night shifts.

In this backdrop, if India’s government and companies are to realize benefits from its demographic dividend, then along with a strong push for education, a comprehensive policy for encouraging job opportunities for women and ensuring income parity and safety are equally important. While the government can initiate steps to address the structural and systemic problems in its training and education system, India Inc should not only implement some "feel good" policies but rather opt for fundamental change in the overall ecosystem of the organization. By metamorphosing themselves into an equal opportunity employer, organizations can reach their required levels of scale. With a growing number of well-educated women entering the workforce, it is but a necessity to find better ways to attract, engage, and retain them.

Setting the tone

To begin with, organizations have begun building a business case for "gender dividend"; by creating equal opportunities by widening the talent pool, so as to have noticeable presence of women in core functions of business such as sales, services, and customer engagement and developing women for higher levels of leadership. Diversity hiring intent among leading companies has gone up by almost 500 percent since last year, according to a recent study by FLEXI Careers India.

From the perspective of India Inc, a host of companies, like HUL, Godrej Industries, PepsiCo, Genpact, Kraft, P&G, Deutsche Bank and others have all stepped-up gender diversity hiring. With 20,000 employees, the number of women employees in Godrej is a mere 8-10 percent at the senior level and only 5-6 percent in functional-head roles and 20 percent in junior management; reasons enough as to why the company has stepped up gender diversity hiring and for good measure. Kotak Mahindra Bank too wants to increase the lateral hiring of women employees to 30 percent by the end of this financial year from the current levels of 20 percent. Apparently, a few companies have gone one step further and mandated that for some jobs (like senior research engineer, market development manager, legal counsel, etc.) they would prefer women. Kraft, for instance, has started hiring women for what was hitherto seen as "men-specific"; jobs: finance, legal and in frontline, modern trade roles, finance and legal. For IBM, which keeps trying new ways of hiring talented women, it is not merely about filling the numbers but understanding that there is strong correlation between success in the marketplace and having a diverse workforce. There are other trendsetters in the industry like Genpact which feel that women not only make up half the talent pool, but also about 50 percent of their consumers and clients, and hence ensuring diversity impacts their business in a positive manner.

Many organizations are walking the talk and are making investments in their intent to create an equal opportunity ecosystem for women to articulate their talent and skills and define what they can do for the organization. If news reports are to be relied upon then in some cases, companies like Microsoft, Alcatel-Lucent, Genpact, IBM, Schneider Electric, and Cadbury-Kraft Foods amongst others, are paying headhunters 30 percent more for women hires than they would for men. Not only this, with increasing number of women climbing the competitive corporate ladder, companies seem to be leaving no stone unturned to lure them and are even offering existing employees an additional bonus as much as 25 percent for referring a female employee.

While the intent is there, there is a need to define a new ecosystem accentuated by talent deficit coupled with low participation of educated women in the workforce.

A New Ecosystem

The last generation of workplace innovations introduced policies to support women with young children, internal networks to help women navigate their careers, and flexible work options which broke down structural barriers holding women back from entering the workforce. While these must continue; a flexible and innovative workplace which appreciates the needs of women employees would go a long way in creating a nurturing ecosystem. Given the socio-cultural and labor market dynamics there can be no standalone program or initiative to help advance women into senior roles. The organizational culture and ecosystem must change which requires a serious commitment from the leadership team and a sincere intent to put metrics in place.

The change in the ecosystem demands CEOs taking the driving seat and making gender mainstream; it deems its place on the CEO's scorecard. The ecosystem must nurture women within the corporate structure and leverage the power of gender diversity. Organizations must be flexible, agile, support innovation and at the same time enable and nurture talented women to become leaders of tomorrow. There must be programs and initiatives in place which help women employees become more self-aware, develop a personal brand and get a better insight into the larger organizational context. The gender inclusion agenda, hitherto considered the domain of HR and personnel management, must be treated as a strategic concern that demands the time and investment from the CEO and the leadership team. The C-suite has a critical role to play in defining a new ecosystem. The required change must come from the CEO and cascade down to the levels including the women network in organizations.

In the present context, the need for a gender-diverse workforce is vital as it has the potential to address workforce challenges relating to talent pool deficit. Besides the added benefits of diversity in perspectives, and skill sets; the journey to redefine the rules of workforce and workplace ecosystem will help create an inclusive environment where talent can thrive and the organization can reap benefits of demographic as well as gender dividend.

RESERVATION: Does Not Make Much Economic Sense

[Written as a part of a project -2006. This was later published in Strategic Innovators in 2009]

Businesses need to maximise profits for shareholders and, therefore, require the freedom to hire people who best fit their needs, and not hire by fiat

“The goal of development is not to make the strong weak, but the reverse.”

What does reservation mean to a layman? Keeping aside the so called intelligentsia, the term is synonymous with Rajeev Goswami, V.P.Singh and his pet project “Mandalocracy …the (in) famous Mandal I ”. The episodes of the early nineties are still fresh in the memoirs of at least a few millions, the wide protest and demonstrations resulted in the prudent dropping of the project from the then Prime Ministers bounty.

"Let others fight for building the asset, we want fixed share of pie when it's built."

With the union HRD minister Mr. Arjun Singh announcing 27% reservation to the OBC (other backward castes) in addition to the existing 22.5% reservation meant for the SC/ST, the issue has raised serious eyebrows and of late has been highly debatable. The government’s announcement that it will implement up to 49 per cent reservation in IITs, IIMs and central universities is yet another example of the grotesque manner in which the state is destroying institutions of higher education. There can be no doubt that marginalised groups need to be given access to important institutions; there is also little doubt that the state has not done enough to create opportunities for marginalised groups. But it does not follow from this that an extra 27 per cent reservations for OBCs is a justifiable way of achieving these objectives. The proposed reservation are meant for seeking admissions to the premier educational institutions viz IIT’s, AIIMS, JNU,DU and other Central Universities supposed to be at par excellence. The Cabinet Secretary has returned the draft reservation bill that the HRD ministry had forwarded. Yet, the new reservation proposal has elicited strong reactions and opposition from across the country.

All this in accordance with the education reservation bill known as the Constitution (104th) Amendment Bill in Parliament piloted by Mr. Singh in December 2005, the Bill allowed for caste-based quotas up to 50 per cent. In addition to this Mrs. Meira Kumar, the Social Justice and Empowerment Minister in the UPA government is on her heels to seek job reservation for the SC/ST/ OBC in the private sector. The Common Minimum Program states, “All reservation quotas, including those relating to promotions, will be fulfilled in a time-bound manner. The Govt. is sensitive to the issue of affirmative action including reservations in the private sector. The government will initiate a dialogue with political parties, industry and other bodies on how best the private sector can fulfill the aspirations of SCs and STs. The Government will fulfill quotas in a time bound manner and to codify all policies on reservations, appropriate legislation will be enacted.” This particularly has been much against the likes of India Inc. The Prime Minister Dr. Manmohan Singh when confronted with stiff opposition from the corporate sector, on the issue relented by saying that the act of reservation would be voluntary and will not be forced on the private corporate sector. They (India Inc) have suggested to the government what has been aptly coined as “Affirmative Action”.

Quota (Reservation): A cure worse than the disease

The problem of equal rights and opportunities dogs every democracy, and India is no exception. The support of reservation in private sector, judiciary and armed forces portends major economic and social upheaval. It’s a point of irony to be studied that, Mr Manmohan Singh, the architect of India's economic liberalisation, on becoming Prime Minister, exhorted the corporate sector to adopt a policy of caste-based reservations. The Congress Government in Andhra Pradesh tried to test waters by declaring five per cent reservation for Muslims, which indeed became a blueprint for the UPA Government's policies. The Defence Minister has sent verbal instructions for providing 20 per cent quota to minority (read Muslims) community in paramilitary forces. “ The Armed forces should be at least kept out of this divisive and debilitating policy of reservation.” All these indicate the mere fact as to where are we heading for with this policy of reservation.

Obviously, the entire game plan seems on the face of it to be a well knit ideology It is but a prima facie that the jobs in the Government sector are shrinking. Economic considerations have forced the Government to even withdraw scheme of pensions for those recruited after December 31, 2001. Hence, proponents of reservation have now targeted the private sector. But the operational grammar of that sector is completely different. What needs to be taken care of at this juncture is that the definition of private sector has changed in the last 13 years (i.e. since early 90’s). Once synonymous with few industrial houses, MNCs and pharmaceutical companies, it now includes BPOs, call centres, IT majors, media companies and biotech to name just a few. Not only economy but also technology has changed dramatically. Does the scheme of reservation fit into this transformed world is a question to be brainstormed and pondered upon before jumping to any discriminatory solution .

India is poor out of choice:

Demands for reservation are indicative of a parasitic mindset that overlooks the gospel of construction, "Let others fight for building the asset, we want fixed share of pie when it's built." Moreover, the policy of reservation made more sense in government jobs that are relatively stable. However, private sector is characterised by retrenchment, closure, merger, acquisition and sell-offs. These can affect the fortunes of all employees including those who have gained entry through reservation. Private sector doesn't go by fixed rules of stipulated salary hike and timely promotions. It goes by performance, incentives and the ability to strike a deal with the employer. It is not compatible with reservation. "Brain Drain" occurred when the country offered no scope for employment for those who were both competent and educated. By sealing the prospects of employment in the private sector, we will create new section of "deprived people". Thus “Brain Drain “is a name of the past follies of the government‘s discriminatory policies seeking the benefit of the so called downtrodden and the destitute in the name of the aptly coined phrase” vote bank policy”. Of late as has been proposed by the human resource ministry perhaps with the blessings of the economist and reformist Prime Minister, the proposal in its present form could lead to a new socio-economic class namely the “deprived class”. The welfare of one segment of the society at the behest of another is surely at least on humanitarian ground is uncalled for. We should work towards an economically less disparate and socially more harmonious society.

Reservation has been a highly misunderstood concept or rather a phenomenon to suit the political biggies. Yet it remains a fact as ever that even the so called followers of the noble Dr. Bhim Rao Ambedkar have completely failed to unearth the philosophy of Babasaheb Ambedkar for the upliftment of the downtrodden and the destitute who were rightly termed as “Harijans “by none other than the Father of Nation “Mohan Das Karamchand Gandhi” whom we remember as Bapu. Babasaheb Ambedkar did not want reservations because he did not consider it the panacea for the emancipation of Dalits. He was himself a highly educated professional lawyer; and he wanted education, not reservation, to be the instrument of Dalit empowerment. But whether it is secularism or reservations, those who pretend to be the followers of Ambedkar, reinterpret him in the opposite manner.

“Reservations are crutches, we need social physiotherapy.”

For the last five and three fourth decades nothing much has been achieved for the alleviation of the needy class of the Indian society be it the SC/ST/OBC/GENERAL category. Except for the election manifestos that make it loud and clear the policies that will be undertaken by the political party (ies) under consideration if they happen to come to power for the next term , implementation is far deviated from the proposed. Yet a 360 degree development remains a distant dream. In the present economic order the positions of OBCs, SC&ST, and Dalits can be alleviated (which are mutually on antagonistic terms) by opening avenues for self-employment or generating regular business.

A peep into the past

The Janata Party Government (1977-79) had set up a commission under parliamentarian B .P Mandal. Its task was to undertake a study and suggest means to ameliorate the condition of the traditionally disadvantaged sections of society. It had suggested 27 per cent quota for OBCs and 22.5 per cent for SC & STs over the already existing reservations. The Indira Gandhi Government that followed and before which the report was presented, threw it into garbage bin. Mrs. Gandhi felt it would reinforce the caste divide in society that had been on the wane since Independence.

However, VP Singh; imposed the suggestions mentioned in the report, with the sole intention of getting even with his Deputy Prime Minister and rival in the National Front Government, Chaudhary Devi Lal. Mr. Singh's decision was not born out of concern for OBCs, but sheer political vendetta. The blazing protest against Mandal Commission in the cities of northern India split Indian society horizontally. No body wants a repetition of those days.

The Past… The Present

“While we believe in harmony and empowerment of all sections, it is neither economically nor socially viable to practice politics of reservation."

This is the current perception held by the youths of the present day generation….the peaceful protests by the medical students (to be read and understood as the best of the brains of India) are strong evidences for the above mentioned fact. “Yet the brutality shown by the police towards the peacefully protesting students marks our Democracy’s march towards Mandalocracy”. In a nutshell with regards to the present scenario that has come into effect because of the myopic decision of the government, with public hospitals at a standstill and medical students on the rampage,….…Human Resource Minister Arjun Singh has to ask himself a basic question: “Is there not a better way to work for the uplift of the backward castes, the minorities, the poor and every other underprivileged section of society, than by taking recourse to reservations?”

The caste based politics that is so very dominant has made the caste card a vital factor in the battle of the ballot. Most parties therefore prefer to jump on to the caste bandwagon rather than take a firm or a reasonable stand on any issue. “Therefore for reasons other than economic, reservations have continued even 57 years after independence.”

Lessons…

“Give a man a fish and he is hungry again tomorrow; give him a rod and teach him how to fish and he’s set up for life.”

The point is that professional politicians do not want to set people up for life. It is not possible to build a reliable, self-perpetuating vote-bank on the basis of teaching people to be independent. You cannot rely on their gratitude to vote you back to power time and again.

Nehru once wrote, “So these external props, as I might call them, the reservation of seats, and the rest — may possibly be helpful occasionally, but they produce a false sense of political relation, a false sense of strength, and, ultimately therefore, they are not so nearly important as real educational, cultural and economic advance which gives them inner strength to face any difficulty or opponent.” It is high time for the incumbent union Human Resource Development minister Mr. Arjun Singh, who wittingly profess to be a hardcore Nehruvian to get this lessons right on what once Pt. Jawaharlal Nehru himself remarked “ reservation…….a false sense of political relation”.

The current announcement also exemplifies the cynicism with which sections of government deal with education. In order to blunt the backlash against reservation, the government is announcing that the number of seats will be increased so as not to reduce the number of seats available in the general category. This is, what might be called, a pure statistical approach to education: increase the number of seats by government fiat, pride yourself on achieving numerical targets without any concern for quality, and make education a totem to be thrown around in mass politics. IITs, IIMs and some of our central universities are a few recognisable brand names left. But instead of ameliorating their problems, these measures will only impede their ability to carry out their mission. For instance, there is an acute shortage of faculty in the IITs and these institutions are already struggling to raise their research profile; our flagship institutions like the Delhi School of Economics are pale shadows of what they once were. In this context, to blithely raise the number of seats is to utterly disregard the conditions that make excellent institutions possible. 

The decision should also be seen in the larger context of the debate over the autonomy and regulation of institutions of higher education. The very day the government made this announcement, the high court in Chennai has passed a controversial judgment considerably enlarging the powers of the AICTE over institutions that are deemed universities. This decision makes a travesty of the concept of a university, which among other things gave institution degree-granting powers. This erosion in the degree-granting powers of universities is part of the same trend that the decision to increase the number of seats exemplifies: let all decisions about whom to admit the criteria of admission and what should be taught, be taken away from educationists, teachers and students, and be put in the hands of political and bureaucratic masters, who will move according to their own political and administrative logic. 

Nehru was right. Reservations have become a substitute for “real cultural, educational and economic advance”, a cheap way of displaying your commitment to justice while you connive in every way possible to make sure that the conditions that produce grievous injustice are not really overcome.

The real issue is how can we expand the supply of good quality institutions, and how can we ensure that social circumstance or financial deprivation does not prevent students from getting the best education they can. 

Economic Sense and Non-Sense….

For reasons other than economic, reservations have continued even 57 years after independence. Apparently there is an economic reason behind the demand for reservations in the private sector. The rationale for such a demand is the belief that economic reform has replaced the government with the private sector as the key job-creator, and therefore reservations have to shift to where the jobs are. Nonetheless, this whole issue of reservations has stirred a hornet’s nest in the corporate sector which is just striving to become globally competitive. From the corporate perspective, the ‘reservation’ issue has unfortunately come at a time when the domestic market has been opened up and the manufacturing sector as a whole is looking at ways to downsize operations to become globally competitive. 

Looking at the whole issue of reservations in a rational perspective there can be no two opinions that the underprivileged section has to be protected. But the question is: should reservation be the instrument to protect them? Considering the burgeoning unemployment – about 26 million people in India are estimated to be openly unemployed- should reservation be considered as an effective means to resolve this problem of unemployment?.

Merit and capability should be the yardstick. The concept of reservation without reference to merit can only have a distorting effect on the operations of the private sector. Besides, businesses need to maximize profits for shareholders and, therefore, require the freedom to hire people who best fit their needs, and not hire by fiat.

Experience is the greatest teacher on any issue we can lay our hands and brains on and reservation is no exception. Experience also shows that such a policy of reservation has not achieved dramatic results. Half a century of job reservation in government services has created only a thin creamy layer of the backward castes who have benefited. Moreover, although caste prejudice could be a barrier to employment, a bigger barrier is lack of education and skills. For centuries the members of the backward community were prevented from acquiring literacy or skills and this was a major cause of their subjugation.

“Affirmative Action” as proposed by India Inc has to be pursued at the base level and not at the apex level. However while stressing that the private sector has a role to play in fulfilling their social responsibilities, it must also be emphasized that making reservation in services compulsory does not seem to be an appropriate method. We do indeed need affirmative action, but certainly not through the failed route of job reservations. 

Reservation is not an atonement of our past sins and should not be used to compensate for the damage inflicted in the past. However, instead of eradicating this injustice, we are further dividing the society and creating splits. We are trying to heal our past wounds by inflicting new ones. It is still a bitter fact that certain sections of the society are exploited and deprived of their rights. India is a country where wealth distribution is highly unequal. We are still living in a highly unjust social structure. Reservation acts as an antidote to an exploitative and unjust social structure known as the caste system. It fosters discrimination and plants the seeds of division in people's minds -- all this in the name of empowering and protecting the deprived sections of the society. Such division is against the cardinal principles of democracy.

Since there is a paucity of educational facilities like medical and engineering, such a privilege becomes a decisive turning point in the careers of several young and bright students. For the institutes, this means mean a fall in the revenue. Giving special privileges to someone merely on the basis of their birth into certain castes or tribes is unjust. People who have benefited from such biased treatment would advocate for more and foster caste sentiments in their minds. Those who have lost the opportunity in spite of having good credentials would start feeling bad about their upper caste credentials. This eventually leads to “The Great Indian ( Social) Divide”.

The benefits are so many and so palpable that the reservation policy has created a vested interest in backwardness. It seems like people want to be considered 'backward' rather than 'forward' in modern India! The more backward you are the more advantages you get. Reservation is now used as a tool for gaining more benefits. The area of reservation has been steadily expanding and newer backward groups and sections of society are mushrooming.

Since the reservation is meant for the minorities and the oppressed, the percentage of seats reserved should also be kept accordingly. Since reservation is meant for the deprived, showing such privileged treatment to the 'creamy layer' from among the 'backward' castes defeats the whole purpose. In fact, people from these creamy layers steal the reserved seats from their other backward counterparts for whom these reservations would have actually made a difference. However, an important and notable aspect is whether these reservations actually reach the people for whom they are really intended? Does reservation empower the deprived sections of the society or is it being misused?

The fundamental problem with the Indian economy is that the education system is one of the most flawed systems in the country. If there is one sector which is in dire need of reform, it is that education system. The most urgently required reform is to get the government out of it—lock, stock, and barrel. The recent move by the government to further increase quotas in the so-called elite institutions with a view to social justice is akin to scuttling the lifeboats even as the ship is sinking. The dysfunctional Indian education system is the saddest and costliest example of governmental ineptitude and malfeasance. The solution to the problem of the Indian educational system has to have at its core getting the government to let go of its chokehold on the system.

Mentality of scarcity and poverty:

The government of India does not believe in abundance. It treats the citizens as if they are incompetent children who will not be able to work out solutions for themselves without the patronizing paternalism of the socialistic control of every aspect of economy. There must be no subsidies for higher education. Higher education, for all intents and purposes from the point of view of an individual, is a private good. For those who cannot afford higher education even though they are qualified for it, they have to be given loans by banks and these loans have to be guaranteed by the government. The basic point is simple: the credit constraint that the poor face with regard to higher education can be released with little effort. This the government must do and if done competently, it will take only one generation for the every poor family to become non-poor. Reservation should and must not come into the picture at any point of time, it is no solution.

Allocating quotas and reserving seats for economically backward classes (and for other historically discriminated and disadvantaged groups) in higher educational institutions is economically inefficient, morally wrong, strategically flawed, and tactically ineffective. The policy does not help the underclass and ends up victimizing both the underclass and the so-called privileged class. The policy epitomizes what is called a “lose-lose” solution, while foregoing a “win-win” situation.

Neo- Welfare Economics of reservation:

All economic policies create gainers and losers. If the gainers gain more than the losers lose, then it is theoretically possible for the gainers to compensate the losers for their loss so that after the compensation, the losers are not any worse off than before and the gainers are better off than before. This is in accordance to Prof. Kaldor and Hicks Compensation Principle to do away with the Pareto Indeterminacy. Such a policy effects what is a called a “Pareto improvement” and is therefore an economically efficient policy. Conversely, if the losers lose more than the gainers gain, then the policy is economically inefficient and there is an overall welfare loss.

Quotas, if they have any effect on the system, effectively replace qualified candidates with otherwise unqualified candidates. Unqualified candidates who enter the system are by definition unable to benefit from the opportunity to the extent that a qualified candidate would have done. The quota candidates are unable to compete within the system. Aside from the welfare loss in terms of wastage of real resources, the quota students suffer psychologically. This reinforces the perception—within both groups—that the group which enjoys the quota is intrinsically inferior. This is perhaps the most pernicious of all the unfortunate effects of a quota system in higher education.

This brings us to the point why quotas in higher education for disadvantaged groups is morally repugnant policy. It penalizes certain people based on their group membership. Discrimination based on caste, creed, origin, color, etc, is morally wrong. So is reverse discrimination. The right thing to do is to remove discrimination, not impose it from up on high. 

The Dual Aspect of the Problem and its Proposed Solution:

The two facets of the problem are: 

Seats are limited. If they were unlimited, there would have been no need for quota. They are limited because the government does not allow free entry into the higher education business. 

Students from certain groups are unable to gain entry into the supply constrained system, and once inside they are ill prepared to compete within the system. If they were qualified, they would not need quota protection in the first place, and would be able to compete once there. 

Get the government out of the business of controlling the supply of higher education. It is undeniable that certain segments of the population are ill prepared to compete for seats in higher education. The fact is that they have not had the opportunity to prepare themselves for higher education. The solution therefore is that they have to be provided help in preparing for higher education, which basically means that they have to be given assistance at levels that precede higher education. They are handicapped at the level of higher education because they are handicapped at the earlier stages of education. If their handicap in the school level is addressed, there is no need to make special provisions for them in the post-school levels. The policy makers need to understand the distinction between the equality of opportunity and the equality of outcome: the former is a necessity for social justice and can be obtained, while the latter is neither possible nor desirable.

Quotas are economically inefficient. Merely increasing the numbers from these groups by fiat will do no good, and indeed may end up harming the groups. “Robbing Paul to feed Peter” is no solution to the continued existence of the politically motivated social evil. The evil in all its present form is the manifestation of the political vendetta of the political parties which grab the power. The nation can no longer withstand the social division based on discriminatory grounds. The social welfare has to be undertaken with due courtesy paid to the “Social Welfare Function” as proposed by Prof. Bergson and the recommendation on the same made by Prof. Arrow.

Concluding Words…

To end I quote Pt. Jawaharlal Nehru “ I dislike any kind of reservation… if we go in for reservation on communal and caste basis we (will) swamp the bright and able people and remain second –rate or third rate….the moment we encourage the second rate we are lost ….this way lies not only folly but disaster.” 1990 Mandal I… 2006 Mandal II…. A deeply divided India awaits the views of the Supreme Court of India.