The Karnataka Cabinet’s recent approval of a Bill mandating reservation in private sector jobs for local residents has sparked significant debate.

While the government’s intention to uplift Kannadigas and address local unemployment is commendable, the proposed Bill raises substantial constitutional concerns and risks deterring investment in the state.

A careful reconsideration of the Bill is essential to ensure it aligns with constitutional mandates while still promoting the welfare of Karnataka’s residents.

Constitutional concerns

According to MR Madhavan, co-founder of PRS Legislative Research, this approach may breach the Constitution in several ways.

First, Article 19(1)(g) of the Constitution guarantees the right to practice any profession or carry out any occupation, trade, or business. The Supreme Court, in the TMA Pai (2002) and PA Inamdar (2005) judgments, held that unaided educational institutions cannot be compelled to implement reservations except based on merit. Establishing and administering an educational institution was deemed an occupation under Article 19(1)(g), protected from undue government interference. While these judgments specifically address educational institutions, they underscore the broader principle of safeguarding private sector autonomy. Imposing mandatory reservations in private employment could similarly infringe upon this constitutional right.

Second, Article 16(2) prohibits discrimination in public employment on the grounds of residence. Article 16(3) allows for reservations based on residence only in public employment and only through laws made by Parliament, not state legislatures. The Supreme Court has previously struck down state laws that imposed residential requirements for employment, as seen in the 2002 ruling against preferential employment provisions in Rajasthan for teachers from specific regions. Extending such reservations to the private sector through state legislation would likely face similar constitutional challenges.

Third, Articles 19(1)(d) and 19(1)(e) grant every citizen the right to move freely and reside anywhere in India. This implicitly includes the right to work anywhere in the country. The proposed Bill’s restrictions on employment based on residency and language proficiency may violate these rights, and its discriminatory provisions could be challenged under Article 14, which guarantees equality before the law.

Finally, the Supreme Court’s 1992 Indira Sawhney judgment capped reservations in public employment at 50%, a rule meant to prevent excessive compartmentalisation in society. The Karnataka Bill’s high reservation percentages could be seen as exceeding this limit without demonstrating extraordinary social backwardness, something that was deemed necessary by the Court in that judgment.

Given these substantial constitutional concerns, it is imperative for the Karnataka government to seek alternative methods to achieve its goals without infringing on constitutional rights.

A balanced approach: Incentives over mandates

Rather than imposing mandatory quotas, the Karnataka government should consider incentivising private companies to employ local candidates. This approach respects constitutional limits while still promoting local welfare. Attractive incentives such as tax breaks, subsidies and priority in state contracts, can be offered to businesses that voluntarily hire a certain percentage of local candidates. To further ensure its robustness, incentive-based policies can be periodically adapted to make it responsive to Karnataka’s evolving economic landscape. This adaptability ensures that policies remain effective and relevant over time.

Encouraging companies to include local employment initiatives in their Corporate Social Responsibility (CSR) activities is another effective strategy. Recognising and rewarding companies that actively contribute to local employment and development through their CSR programs can foster a culture of inclusive growth. This not only supports local communities, but also enhances the corporate image of participating companies, making it a win-win situation.

Creating public-private partnerships focused on local employment can further enhance these efforts. These partnerships could involve collaboration on training programs, job fairs and internship opportunities for local candidates. Such initiatives can promote local hiring without the need for restrictive legislation. By leveraging the strengths of both sectors, these partnerships can provide comprehensive solutions to employment challenges.

Lastly, before implementing any new provisions, thorough impact assessments should be conducted to understand the potential economic and social consequences. This can help in designing policies that are effective and minimise negative impacts on businesses and the broader economy. Impact assessments would ensure that policies are grounded in reality and tailored to the specific needs of the Kannadigas. Further, a dedicated committee can be established to monitor the impact of these policies on employment and investment. Regular reviews and adjustments by the committee based on data and feedback will ensure the policies remain effective and fair. Further, transparency in how incentives are awarded and in the employment patterns of local candidates will build trust and accountability. By continuously evaluating and refining these policies, the government can achieve the desired outcomes while maintaining public confidence.

Conclusion

The Karnataka jobs-for-locals Bill, as currently proposed, poses significant constitutional challenges and risks deterring investment. However, the goal of improving local employment opportunities is laudable and necessary. By shifting from mandates to incentives, the government can respect constitutional boundaries while promoting local welfare. Additionally, conducting thorough impact assessments and establishing a dedicated committee to monitor these policies will ensure they remain effective, fair and adaptable to changing economic conditions. This balanced approach can ensure that Karnataka remains attractive for investments while advancing the interests of its residents.

Jehosh Paul is a lawyer and research consultant. He is associated with the Congress. The views expressed herein are strictly personal and not of the organisation.