NATIONAL LAW INSTITUTE UNIVERSITY

BHOPAL

A Seminar Paper on

Reservation in Private Sector Employment: It’s Constitutionality

Submitted by: Submitted to:

Athik Saleh T Prof. (Dr.) Bir Pal Singh
2014BALLB108 Assistant Professor

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ACKNOWLEDGEMENT
First and foremost, praises and thanks to the God, the Almighty, for His showers of blessings
throughout my research work to complete the research successfully.

I would like to express my deep and sincere gratitude to my Affirmative Action professor, Assistant
Prof. (Dr.) Bir Pal Singh for giving me the opportunity to do research and providing invaluable
guidance throughout this research. His dynamism, vision, sincerity and motivation have deeply
inspired me. He has taught me the methodology to carry out the research and to present the research
works as clearly as possible. It was a great privilege and honor to study under his guidance. I am
extremely grateful for what he has offered me.

I would also like to express my gratitude to the university for providing me the necessary means and
resources to complete the research in a systematic manner in these times of uncertainty. Lastly, I’d
like to thank my parents and colleagues for providing me necessary input wherever required.
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INTRODUCTION
THE inclusion of the concept of reservation in the private sector undertakings in the National
Common Minimum Programme had evoked strong displeasure among the captains of industry all
over India. They openly came out against the idea of reservation, which according to them would
adversely affect the efficiency in the private sector. They even went to the extent of claiming that the
reservation was one of the major causes of inefficient running of the public sector undertakings. 
 The idea was first mooted by the Commission for SC and ST in response to the demand raised by
the National Convention of SC and ST unions. The commission claimed that the employment of SC
and ST workers in private sector was negligible due to low level of education and technical training
among the dalit workers. The high drop-out rates of dalit students in the school was not due to their
lack of interest in studies but due to acute poverty conditions of their parents which forced them to
leave the education and search for any available low paid job to keep him alive. 
 When the government was not strict to enforce reservation in public sector undertakings, the
employment of dalits and adivasis in public sector was also extremely low. It was only due to public
pressure on the government that the reservation of dalits and adivasis was strictly enforced in the
public sector. It is a well-known fact that it took years in the public sector to fulfill the backlog of
jobs for the underprivileged strata.
 In the era of globalisation when downsizing of manpower became a key slogan in government
services and public sector undertakings and VRS route became handy to the authorities several dalits
and adivasi workers lost their jobs along with their caste brothers. With privatisation of public sector
undertakings the job reservation was not binding on the new private owners. In these undertakings
downsizing mostly affected the SC and ST workers. 
 The ban on recruitment announced in government service and public undertakings has further hit the
employment of dalits and adivasis in service when a person retired from service the vacancy was not
filled in, which also affected the employment of SC and ST workers. Thousands of vacant posts
remained unfilled which included posts held by SC/ST employees. The situation became more
compounded by abolition of thousands of posts arbitrarily by the government. Abolition of
government departments and closure of public sector undertakings have hit hard the employment of
SC and ST workers in government services and public undertakings. 
 Despite all these weaknesses, the reservation has provided some job opportunities for SC and ST
persons which was not available earlier. Now, consequent to the growing awareness among the dalits
and adivasis and their pressure on the government highlighted the question of reservation in the
private sector.
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STATEMENT OF PROBLEM

Reservation in public employment opportunities in itself is a topic of heated discussion in India. In

an era where the country is heading in the direction of more and more privatization, government
disinvestment and liberalization, reservation in private employment has also come in to the forefront.
Although the constitution or any legislative instrument prescribes for reservation in private sector, it
is necessary to look in to its constitutionality and its effect on different interested parties, for the
present affirmative action regime in India has failed to provide results beyond a certain extend. This
paper intends to look in to the arguments favoring and disfavoring reservation in private
employment, its constitutionality and its impact in era of shrinking government employment
opportunities and widening income gap.

OBJECTIVES

 To examine and study the constitutionality of reservation in private employment in India.,

 To understand the impact of reservation in private sector on different stakeholders.

 To examine and study the theoretical, legal and social basis of reservation in private
employment.

 To suggest measures to develop a comprehensive affirmative action regime in an era

globalization, liberalization and privatization.

RESEARCH QUESTION

What is the constitutional status of reservation in private employment, and what is the premise upon
which such a reservation policy will stand the scrutiny of courts and different stakeholders involved?

RESEARCH METHODOLOGY

The method of research used in the completion of this paper is doctrinal in nature. For the purpose of
research, secondary sources were used.
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RESERVATION IN PRIVATE SECTOR EMPLOYMENT: IT’S CONSTITUTIONALITY

Equality is the order of nature. Life in nature does not discriminate the two of a same kind.
Discrimination is the human concept. It is he who propelled by the emotions of nearness favors one
and discriminates other. But it is also true that the nature also does not follow equality in
mathematical sense. There fore equality being a natural and human right requires a special favour
from the highest institution of human being i.e. the State. Yet the State cannot treat the two unequal’s
equally as it would be against the basis of equality i.e. treatment of unequal’s equally results in
inequality.

However, when two human beings born as human being and hence are equal but one stands at a
disadvantageous position whether due to the historical reasons or because of the perpetuating
discrimination, the principle of equality becomes worthless. He is required to be favoured and
pushed forward in order to bring him equal to one who is at advantageous position. This would be
equality in the real sense of the term. However, it is also a striking fact that the Indian society been
unequal and where few were exploited and depressed from the historical times. Different from one
that one has suffered due to his colour or race in Western societies the kind of inequality in our
society has totally a different complexion as it has stemmed from caste. Historically the dalits have
been unable to access education and professions, because of the sickening and inhuman system of
purity and pollution, which remains embedded in religious communities across India.

Hence Justice PB Sawant says,

“The right to equality without the capacity and the means to avail of the benefits equally is a
cruel joke practiced on the deprived sections of the society. It widens the social and economic
inequalities progressively with the haves making use of the guaranteed right to amass the
fruits of progress, and the have-nots remaining where they are. The exceptions (to the right to
equality law) enable the State to make the deprived capable of availing of the benefits which
otherwise they would not be able to do. It is to give effect to the principle of equality that the
exceptions become mandatory in any unequal society such as ours which intends to become
egalitarian.” To treat two unequal’s equally causes as much injustice as to treat two equals
unequally. The jurisprudence of equality therefore requires that those below are leveled up to
those above.1

Though the policy of affirmative action or positive discrimination by the State in the matters
of public employment has been in vogue for last 73 years, yet the issue has come to the forefront due
to the fact that economic capacity of the State has substantially shrinked by the policy of economic
1
P.B. Sawant, The Constitution, Equality and Reservations, (June 14, 2003) Mainstream,
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liberalization and globalization in which the Public sector is losing significance and private sector is
taking the rein of economic growth in its own hands. This has also resulted it reduction of
employment opportunities to those of depressed class along with others who were under the program
of positive discrimination carried on by the State were entitled to the reserved post under the
provisions of Article 16(4). Since the public and government sector is itself loosing momentum the
beneficiaries of reservation are also loosing the number of opportunities available to them.
According to the Report of the Working Group on the Empowering SCs appointed by the National
Commission on Scheduled Castes, the SCs lost about 1,13,430 job opportunities in the central
government during the period 1992-97, constituting a decline of 10.07 per cent. 2 This has also
resulted in competition between the class beneficiary of positive discrimination by the State. The
ugliness of competition for reservations benefits that identity politics sponsors was seen in the recent
violent conflicts over reservations for gujjars. The fact is that each and every caste has started
making demands for reservation and inclusion in one or another list, be in SC list or ST list or in
OBC list. Rajasthan makes one skeptical of the reservations policy. There are few issues in a crucial
debate that touches upon issues of equality, justice and national integration.3

This has further enhanced the problem in respect of the depressed class as a whole. A
revelation of the reduction of employment opportunities in the pubic sector made some political
parties and their leaders advance the demand for extending reservations to the expanding private
sector. There is an implicit assumption in this demand that employment opportunities are increasing
in the private sector merely because it is expanding. 4 This problem has pushed the government to
take remedial actions.

There is also a political background to this issue, which on one hand is consistent with their
general political philosophy while on the other hand also guided by purely opportunistic political
game plan. Some in order to regain their lost committed constituency while other not to lag behind in
this run, are demanding reservation in private sector. As soon as taking power in centre the
Government constituted a Group of Minister to look in the issue of affirmative action in private
sector, which recommended for affirmative action in private sector thus the party which was once
champions of liberalization strongly lean in favour of reservation in private sector.5

2
Prakash Louis (2005): ‘Affirmative Action in Private Sector’, August 14 Economic and Political Weekly,.
3
Tarunabh Khaitan (2008), ‘Transcending Reservations: a Paradigm Shift in the Debate on equality’,
September 20, Economic & Political Weekly, pp.8-12
4
G Thimmaiah (2005), ‘Implications of Reservations in Private Sector’ Feb 19, Economic and Political
Weekly 745
5
Ibid.
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Arguments in favour of reservation in private sector:

1. Many has argued that since the government provides free land, tax exemption, credit
from government-owned banks and many other infrastructure facilities to private
industries, it is morally entitled to ask in return reservations for socially backward
people.6

2. Though the private sector strongly says that we do not consider colour of skin or last
name or caste7 for the purpose of employment yet it is a striking fact that the
depressed class is being discriminated in private sector on the ground of sex, caste,
place or other considerations.8

Thus, the policy of liberalization and privatization reduced the number of employment
opportunities in the public sector, which, in turn, reduced the job opportunities for SC/STs and OBCs
in government administration and government-owned enterprises. However the private sector
strictly refused to accept this proposal as it would affect their competitive capabilities and profit
margin and would in turn affect their economic viability.9

In recent times, the scholars and academicians have on the basis of examination of the policy
of reservation carried on in India during the seven and half decades, rejected out rightly or suggested
alternative method to the present policy. Few scholar suggested have proposed a point-based
affirmative action programme that takes into account both group and individual disadvantages. 10
While others have recommended a slew of measures, including an anti-discrimination law and
reservations, to achieve social justice of Indian society.11 Till recently, these dissenting voices have
largely been academic or activist. But the last few years have witnessed a creeping change in the
government discourse on equality, a sort of officialisation of these voices. Recognising this change is
critical to everyone who has been dissatisfied with the unidimensional equality model embodied in
the reservations policy.

On this backdrop we come to examine the issue of constitutionality of reservation in private

sector employment if it has been employed in practice. For this purpose the discussion in the
6
Ibid.
7
Sunil Kumar Munjal, President of CII in an Article published in The Times of India, New Delhi, June 23,
2004.
8
Report by the Expert Group to Examine and Determine the Structure and Functions of an Equal
Opportunity Commission Set up by the Ministry of Minority Affairs, Government of India, February,
2008.
9
Supra note 4.
10
Satish Deshpande and Yogendra Yadav (2006): ‘Redesigning Affirmative Action: Castes and Benefits in
Higher Education’, Economic & Political Weekly, July 17, p 2419.
11
Sukhdeo Thorat, (2006): ‘Paying the Social Debt’, Economic & P olitical Weekly, June 17, pp 2432-34.
 8

following parts have been examined firstly the concept of equality, then equality as accepted in
Indian context followed by the human right aspect of equality.

1. The Concept of Equality:

The idea of equality is one of the foundational values of our Republic. This was one of the
core values shared by the various visions of India articulated by the different strands of our freedom
movement. These strands drew upon different egalitarian traditions within India and the west, placed
different emphases on the various spheres of equality, advocated different strategies for achieving
equality and indeed differed in how much weight they accorded to the idea of equality in their vision
of future India. Yet it was quite evident to the builders of modern India that the freedom movement
drew a good deal of its energy not just from an urge to achieve political freedom but also from the
aspiration for equality. It was natural therefore that the idea of equality was enshrined as first among
the Fundamental Rights in the Constitution of India. The Preamble to the Constitution includes
“Equality of Status and of Opportunity to all Citizens” as one of the guiding values for the new
Republic.12

The idea of equality is not merely a principle propounded by legal experts and respected by
courts of law. It has a much wider resonance in the country’s public life.

The egalitarian strands in the freedom movement acquired a much wider presence in post-
independence India and have come to shape the language of State policy, political discourse and
public opinion. Every one of the Five Year Plan documents talks of elimination of poverty, reduction
of inequalities and securing just conditions of life for the most deprived groups in society. The
National Policy on Education identified that its main task was to ‘strengthen the base of the
pyramid’. Expressions such as these are routinely used in the Presidential Address to the Parliament
and to the Nation.13

Thus one of the aspect of equality is the equality of opportunity which has been examined in
the succeeding part.

2. The Concept of Equality of opportunity:

12
Supra note 8, at para.. 1.1.
13
Ibid
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The equality of opportunity derives its content from the idea of equality, which is that there
should not be discrimination. This idea can be further articulated by saying that any person in the
matters of employment and work opportunity should not be discriminated on the irrelevant grounds.
Such grounds which in their essence do not have any bearing upon the suitability and efficiency of
any person can be sex, race, caste, place of birth, sexual orientation, eating habits, nationality etc. It
is almost universally recongnised principle that law should impliedly or specifically should prohibit
the employers from discrimination in the matters of employment on such irrelevant grounds.

However, as we have seen in the above discussion that the person suffering from some kind
of disability due to which he is unable to avail the equal opportunity available to him, such hollow
and formal equality becomes worthless. There fore in such a situation the concept of substantive
equality becomes indispensable.

a) Formal Approach of Equality:

The formal approach to equality of opportunity places minimum demands on the state. In this
approach, the requirements of equality of opportunity are satisfied

(i) if all the public offices and resources are in principle open to everyone,

(ii) if there is no discrimination on grounds only of immutable group identity and

(iii) if the outcome reflects a criterion relevant to the task.14

A formal approach to equality of opportunity would insist that there be no requirement in addition to
these three basic requirements of a ‘fair competition’. While this approach rules out explicit
discrimination, this is very much compatible with indirect or structural discrimination. To repeat a
famous example, this is compatible with a former Warrior class that continues to have a monopoly of
Warrior positions in a ‘fair’ competition because only they have the resources to cultivate the
qualities required in that competition. This understanding of equality of opportunity has no room to
look for background conditions that go into the making of ‘opportunities’. In a strict sense this
approach is about ‘openness of opportunity’ and procedural fairness rather than about equality of
opportunity.

b) Substantive Approach of Equality:

The substantive approach to equality of opportunity differs from a formal approach in three
fundamental but related ways.

14
Supra note 8, at p. 16
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First, a substantive approach goes beyond the absence of direct discrimination and includes within
the scope of equality of opportunity a mandate to eliminate indirect discrimination.

Secondly a substantive approach requires the State policy to take into account and neutralize not just
the current circumstances but also historical burden of circumstances.15

These are usually and primarily because of the historically built in tendencies or the force generated
by the socio-economic structures. It thus happens that outcomes or consequences of the existing
system disadvantage certain groups or communities in an enduring way. Thirdly, following from the
first two, this approach implies an obligation on the state and thus creates a positive duty on public
authorities. The state cannot limit itself to a negative role of non-discrimination; in this
understanding, the state carries a responsibility to strive to create parity of circumstances. It should
be noted here that a substantive approach in itself does not commit the state to any particular way of
achieving this parity. This leaves open the question of which instrumentalities the state should use to
realize this objective.

c) Judicial View on Equality of Opportunity:

This foundational value was secured through two kinds of provisions in the Constitution. Articles 14,
15, 16 and 17 secure formal equality before the law, stipulate equal opportunity in employment and
prohibit unjust discrimination based on accidents of birth. Having secured this, the Constitution goes
on to make some provisions for substantive equality. Some of these provisions for substantive
equality were included in Articles 15(3), (4) and (5), 16(3), (4), (4A), (4B) and (5) and 17 in
Fundamental Rights in Part III of the Constitution and Articles 330 to 342 in Part XVI of the
Constitution. As such, a model of equality of opportunity that goes beyond the formal to recognize
substantive equality is very much a part of the “basic structure of the Constitution.” 16 This privileged
constitutional status for substantive equality places any mechanism for ensuring equality of
opportunity on a sounder footing than is the case elsewhere in the world.

A substantive reading of the idea of equality in the Constitution is considerably strengthened by

Directive Principles of State Policy in Part IV. The Directive Principles expand the scope of the idea
of equality beyond political equality to include equality in the socio-economic sphere.17 The
Directive Principles also enjoin a positive duty upon the State to secure these rights of the citizens.
These provisions require the State to eliminate inequalities of opportunity among individuals as well
as groups, to secure a just social order, and provide education, work and social welfare benefits to all

15
Supra note 3.
16
State of Kerala v N.M. Thomas (1976) 2 SCC 310., Per K.K. Mathew.J.
17
Article 46.
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its citizens. The creation of an institutional mechanism to secure and protect equality of opportunity
flows from this constitutional mandate.

The Constitution as interpreted by the courts supports the substantive approach to equality of
opportunity. The provisions of the Constitution make it quite clear that the Constitution goes beyond
merely prohibiting direct discrimination. The Constitution vide DPSP clearly enjoin upon the State a
positive duty to strive to minimize the inequalities in income, and endeavour to eliminate inequalities
in status, facilities and opportunities, not only amongst individuals but also amongst groups of people
residing in different areas or engaged in different vocations. The Supreme Court of India has variedly
spelt out the rich dimensions of Art 14 of the Constitution. The court has perceived the mandate of
Art 14, as the obligation of the State to progressively ensure equality of status and parity of
conditions in order that every citizen is able to realize her welfare and well-being without any
externally created impediment. Some of the landmark judgments of the Supreme Court provide an
interpretation of the idea of equal opportunity.18

For instance in N.M. Thomas case19 the proviso to a rule on departmental tests for promotion of
lower division clerks to upper division clerks had been challenged as it granted a temporary
exemption of two years to Scheduled Castes and Scheduled Tribes whereby they got additional time
to take the tests after they had been promoted. The Supreme Court upheld the validity of the
impugned rule. Chief Justice Ray said,

“The guarantee of equality before the law or of the equal opportunity in matters of
employment is a guarantee of something more than what is required by formal
equality. It implies differential treatment of persons who are unequal. Egalitarian
principle has therefore enhanced the growing belief that Government has an
affirmative duty to eliminate inequalities and to provide opportunities for the exercise
of human rights and claims.” He further said “The rule of classification is not a
natural and logical corollary of the rule of equality but the rule of differentiation is
inherent in the concept of equality. Equality means parity of treatment under parity of
conditions.”

Justice K. K. Mathew gave a detailed opinion on the equality of opportunity while upholding
the validity of the rule. According to him,

The ultimate reason for the demand of equality for the members of backward classes
is a moral perspective which affirms the intrinsic value of all human beings and calls
18
Supra note 16 at para 2.6
19
State of Kerala v. N.M Thomas (1976) 2 SCC 310.
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for a society which provides those conditions of life which men need for development
of their varying capacities……The notion of equality of opportunity’s a notion that a
limited good shall in fact be allocated on the grounds which do not a priori exclude
any section of those that desire it…. ......The question therefore is: On what basis can
any citizen or class of citizens be excluded from his or their fair share of
representation? As I said, the notion of equality of opportunity has meaning only
when a limited good or, in the present context, a limited number of posts, should be
allocated on grounds which do not a priori exclude any section of citizens of those
that desire it.20

What then, is a priori exclusion? It means exclusion on grounds other than those
appropriate or rational for the good (posts) in question. The notion requires not
merely that there should be no exclusion from access on grounds other than those
appropriate or rational for the good in question, but the grounds considered
appropriate for the good should themselves be such that people from all sections of
society have an equal chance of satisfying them. 21

Equality of opportunity is not simply a matter of legal equality. Its existence depends,
not merely on the absence of disabilities, but on the presence of abilities. It obtains in
so far as, and only in so far as, each member of a community, whatever his birth or
occupation or social position, possesses in fact, and not merely in form, equal
chances of using to the full his natural endowments of physique, of character, and of
intelligence.

3. Human Right Aspect of Equality of Opportunity:

India is obliged to implement the principle of equality in all fields of human walk including
employment and work under international covenants, which she is signatory. The main provisions
relating to equality of opportunity in International jurisdiction are as follows:

1) Universal Declaration of Human Rights (UDHR)

Articles 1, 2 and 7 of the UDHR guarantee all persons with the rights and freedoms
provided in the Declaration without any distinction on the basis of race, colour, sex,
language, religion, political or other opinion, national or social origin, property, birth or
other status. All persons are entitled to equal protection before the law and to equal

20
Ibid.
21
Ibid.
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protection against any discrimination in violation of this Declaration and against any
incitement to such discrimination.

2) International Covenant on Civil and Political Rights (ICCPR)

Article 26 guarantees the right to equality and to the equal protection of the law. It
prohibits discrimination based on the grounds of race, colour, religion, national or social
origin, birth or other status, property and political or other opinion.

3) International Covenant on Economic, Social and Cultural Rights (ICESCR)

Article 7 guarantees the right to the enjoyment of just and favourable conditions of work
as well as fair remuneration, and in particular recognizes that equal opportunity be
provided so that everyone can be promoted to an appropriate higher level based solely on
their seniority and competence.

Article 13 recognises the right to education of all persons and states that secondary and
higher education, including technical and vocational education shall be available as well
as accessible by all persons by appropriate means. Secondary and higher education shall
progressively be made free.

4) Convention on the Elimination of Discrimination Against Women (CEDAW)

Article 3 mandates state parties to take appropriate measures in the political, social,
economic and cultural spheres to ensure the full development and advancement of
women.

Article 4 states that temporary special measures aimed at accelerating de facto equality
between men and women shall not be considered as discrimination as defined in the
Convention, and shall be discontinued when the objectives of equality of opportunity and
treatment have been achieved.

5) Convention on the Rights of Persons with Disabilities

Article 3 lists non-discrimination, equality of opportunity and, the respect for difference
and acceptance of persons with disabilities as part of human diversity, as the general
principles of the Convention. Specific measures which are necessary to accelerate or
achieve de facto equality of persons with disabilities shall not be considered
discrimination under the present Convention.
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The above mentioned International Instruments clearly shows that the human right of equality
of opportunity that binds in India under the international obligation to secure equality of opportunity
to all and to protect from discrimination on the ground either of sex, caste, place of birth, religion etc.

Reservation as Strategy to Achieve Substantive Equality

The strategy of reservation of equalising opportunities for identified groups long

discriminated has been in vogue for the last several decades. However, for a variety of reasons, the
strategy of removal of disabilities could not automatically bring about equalisation of life chances to
many groups in our heterogeneous society. Deprivation and exclusion are complex processes which
warrant multi-pronged approaches by way of creation of parity of conditions through legislative and
executive action. This is the affirmative action agenda which is in addition to the reservation strategy
that is now available only for certain deprived groups. In other words, we need to look now for
policies and programmes to supplement the existing system of reservations to enable the deprived
groups to find equal opportunities to access rights and entitlements.

Approaches Justifying Affirmative Action:

There are two kinds of major conventional approaches for justifying affirmative action:

a) Backward Looking Approach:

Firstly, the backward-looking (i e, reparations based), that focuses on past injustice and demands
reparation. In India, affirmative action for the marginalized sections is essentially rooted in
approach based on past injustice and reparation.

“Backward-looking” argument, a very different frame-work from the second one, focuses on
injustice of the past, and stresses that because these past events occurred, we have certain duties
and responsibilities now to ameliorate the injustices of past and pay back the dues.

The argument involves an essential reference to the unjust actions of the past. This principle is to
bring in certain duties to respond to certain past events in specified ways.22

There are nonetheless serious difficulties with this approach. There is scepticism and
apprehension in contemporary debates about the value of focusing on historical injustice as the
most appropriate means of addressing the claims of the present victims. In strict sense of the
term, it is too hard to measure the degree of past advantages and disadvantages or injustice in a
simple and straightforward way.23
22
Amarnath Mohanty (2007), “Affirmative Action in India: An Alternative Perspective”, Economic &
Political Weekly, Vol. 42 , No. 30, July 28 , p. 3153.
23
Ibid.
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Backward-looking argument concentrates too narrowly on the allocation of blame, and not
adequately on contemporary disadvantages. Compensation and reparation may be due for certain
specific wrongs but cannot by themselves carry the burden of rectifying the kind of systematic
injustice victims suffer from. At best, it asks for symbolic act of public reconciliation or
atonement rather than substantial justice.24

b) Forward Looking Approach:

Secondly, the Forward-looking (i e, utility based), which appeals exclusively to the good result
expected from such programme. The thrust of the forward-looking argument is that what has
happened in the past is not itself relevant to what should we do and to what is reasonable from
humanitarian perspective. The aim of affirmative discrimination is not to compensate anyone for
harm caused by past wrongdoing, but rather simply to promote certain highly desirable forms of
social change to break endlessly continuing cycle of poverty and subservience. It tries to avoid
extremely complicated causal connections between the past wrongs and current positions of
certain individuals. At best, it presents clues as to what acts and policies are likely to generate the
best future.25

Consequentialism always tries to resolve what ought to be done at present by fixing attention
exclusively on future results. Consequentialists take help of the past or consults history in a very
limited sense, i e, only for predicting the future results, but the past never plays a fundamental role in
final evaluation of the project.26

PROBLEMS RELATING TO RESERVATION IN PRIVATE SECTOR:

But before going into further discussion on other issues in this paper it is necessary to examine few
of the problems which are existing in factual state in case of private sector reservations. Those are
the following:

(a) Legal status: The Constitution makes provision under Article 16(4) for reservation in
employment for socially and educationally backward people. Without taking into
consideration the language of Article 16 (4), one State Government prepared legislations in
the private sector. Though it was not enacted, that draft has become a reference document for
even the former UPA government to threaten the private sector with legislation. The

24
Ibid.
25
Ibid, at p. 3152.
26
J Waldron, (1992): ‘Superseding Historical Injustice’, Ethics, 103, cited in ibid
 16

argument on the part of government in favour of reservation is that since the government
provides free land, tax exemption, credit from government-owned banks and many other
infrastructure facilities to private industries, it is morally entitled to ask in return reservations
for socially backward people. In some states the state governments have forced private
educational institutions which receive government grants to provide reservations in
admissions as well as in jobs. However, such an argument is not sustainable in respect of
those private industries which do not receive any such sops from the government and fail on
constitutional touchstone. This constitutional issue will have to be decided by the Supreme
Court.27

(b) Implementation: In respect of implementation of reservation policy in private sector

involves a number of issues. They are as following:

(i) Identification of Beneficiaries: The first issue to be decided is whether job

reservations in private sector will be confined to the SC/STs only or OBCs too.
This is because there is no uniformity of the castes included in OBCs lists across
the states and in some States Brahmin also falls in OBCs list. One way out of this
quagmire is to follow the Mandal Commission’s recommendations, which has
specifically listed OBCs in each state. Even after solving this issue, there still
remains the issue of excluding the creamy layer among OBCs. Though the
Supreme Court asked the centre and the state governments to prescribe
appropriate income limits for eliminating the creamy layer among the OBCs,28 it
has been done so haphazardly in many states. Under these circumstances, it is not
desirable to force the private industries to make reservations for OBCs.29

(ii) Demerits of Prevalent Policy: Private industries are already employing a large
number of OBC candidates but based only on their merit and performance.
Therefore, the case for reserving jobs for OBCs in the private sector is not as
strong as it is in the case of SC/STs. If by force of law it is imposed, consequently,
all the inadequacies (arbitrary inclusion of castes) and abuses (false caste and
income certificates) of the existing reservation policy will impose considerable
costs on the private sector. On the other hand, even the SC/ST lists are not free
from dispute because one caste is included in one list while in other in other State.
This has happened because of the defective lists of SCs and STs which were
27
Supra note 4, at p. 745
28
Ibid., at p 747
29
Ibid.
 17

prepared by the colonial provincial governments and revised in haste by the later
state governments. As a result, the deserving SC/STs have not enjoyed the
benefits of guaranteed reservations to the expected extent. What has happened is
that the more dominant and articulate among them have come to monopolise the
benefits. In way back in 1960s revision of the list of ST/SCs to exclude caste
which were not untouchables was demanded, upon which a Lakur committee
constituted. The committee recommended de-scheduling of 18 scheduled castes
and 13 scheduled tribes constituting 2.23 crore people. Because of fear to loose
large chunk of electorate support the recommendations were thrown into dustbin
and it ended a sincere attempt of weed out SC/ST lists.30

Supreme Court, which ruled that such proportionate reservation should be done by
parliament.31 The matter stands there for the present. With such defective lists of
SC/STs and OBCs, it would be very difficult for the government force
reservations on the private sector.32

(iii) Magnitude of Reservation: There is no mention of either the magnitude of

reservation or duration of such a policy under Article 16(4). Proportional
representation in the principle only for Articles 330 and 332 and not Art. 16(4).
The state governments which implemented reservation in government jobs
followed the guideline in Indra Sahwney case under Article 16(4). But in the case
of OBCs, some states like Tamil Nadu went beyond what can be considered
reasonable and reserved as much as 69%. But, the Supreme Court made it clear
that the magnitude cannot exceed 50%. The court observed:

we must, however, point out that clause (4) speaks of adequate representation
and not proportionate representation. Adequate representation cannot be read
as proportionate representation. Principle of proportionate representation is
accepted only in Articles 330 and 332 of the Constitution and that too, for a
limited period. These Articles speak of reservation of seats in Lok Sabha and
the state legislatures in favour of STs and SCs proportionate to their
population. But they are only temporary and special provisions. It is, therefore,
not possible to accept the theory of proportionate representation though the
proportion of population of backward classes to the total population would
30
Ibid
31
See Indira Sahwney v Union of India AIR 1993 SC
32
Supra note 4 at p. 748
 18

certainly be relevant. Just as every power must be exercised reasonably and

fairly, the power conferred by clause (4) of Article 16 should also be exercised
in a fair manner and within reasonable limits – and what is more reasonable
than to say that reservation under clause (4) shall not exceed 50 per cent of the
appointments or posts, barring certain extraordinary situations.33

The Mandal Commission recommended for OBCs reservation upto half of the 52 %
total population. Even after adding the reservation for SC/ST the total reservation
does not exceed the above limit. But, as per the Lakur committee recommendations, if
SC/ST reservation quota is reduced by one-third, it will stand at 12 per cent.
Similarly, if we exclude the undeserving OBC on the basis of the creamy layer
criterion, their share may come down to about 12 per cent. Together the whole
reservation will be about 24 or 25 per cent. But there is no compelling justification for
providing reservations for OBCs in the private sector. So we are left with 12 per cent
reservation for the SC/STs, which is reasonable and may not impose unbearable costs
on the private sector.34

This is also consistent with the Supreme Court view that Article 16 (4) does not
permit proportionate reservation. However, such reduction or exclusion would
certainly brawl those belonging to the class.

c) Cost effectiveness: The next question is the costs which the proposed policy may impose on
the private sector. Most of the industry spokesmen have argued that reservation will ruin their
competitive edge because of relaxation of merit as the sole criterion for selecting the
workforce.

(i) Lower Productivity Level: The dilution of merit in the name of reservation will impose a
cost (in terms of lower labour productivity) on the industries, which may not be able to
compete in the global markets. This is a genuine fear because our past experience in PSUs
and even in government departments has shown that those who get secured jobs become
indifferent to their duties and responsibilities. This is much more so among persons who
enter government service under the reserved category. Consequently, governments have
become inefficient and ineffective.35

33
M.R. Balaji v State of Madras AIR 1963 SC 649 finally approved in Indira Sahwney v Union of India. AIR
1993 SC 477
34
Supra note 4.
35
Ibid.
 19

Though, in theory, public enterprises and the governments in power are accountable and
responsible to the legislature, in actual practice, nobody has enforced accountability and
responsibility.

But private enterprises are accountable to the board of directors and shareholders. Private
enterprises cannot afford to become inefficient and lose on productivity. If government
enterprises incur losses, the government can pour in public money to shore them up. But
if a private enterprise incurs losses because of low productivity, it will have to eventually
fold up.36

(ii) Merits of Aspirants: There is another angle to the cost of reservations in the private
sector. Merit for civil services and jobs in public enterprises is mainly determined by the
marks secured in university examination and/or prescribed tests besides, articulation and
ability to make decisions may be expected as additional qualifications for higher level
civil service jobs. In the private sector, necessary criterion are special skills for the job, a
capacity to work hard, an ability to make quick decisions, a pleasant personality, an
attitude to get along well with others in the organisation and an ability to work in teams
are required. A reservation policy in the private sector may impose regulation on the
selection process and the standard yardsticks for selection which may take away the
freedom which the private enterprises enjoy. The reservation policy may also act as a
regulation of the recruitment policy and practice of private enterprises.37

(iii) Application in respect of Promotions: Another issue relates to the security of the jobs
provided under the reservation policy and the applicability of reservations in promotions.
The private sector in India has gradually moved away from the practice of appointing
personnel until their retirement age to making contract appointments to get over the costs
imposed by stringent labour laws. This contract appointment system should not be
disturbed by reservation policy as otherwise it will amount to making the existing labour
laws more stringent. Further, the Constitution has been amended to add Article 16 (4A),
which provides for reservations in promotions for the SC/STs. If that policy is imposed
on the private sector Indian industry will fail to attract skilled and talented manpower
which will adversely affect its competitive edge.38

36
Ibid. at p 748
37
Ibid.
38
Ibid
 20

d) Beneficiaries of reservations: In the whole debate on reservations in the private sector there
is an implicit assumption that job opportunities are growing. This is a doubtful assumption
because most of the countries whose economies are driven by the private sector are
experiencing ‘job- less growth’ resulting from the spread of sophisticated technology. In
India it is not only the use of sophisticated technology in the production process, but also the
stringent labour laws that are creating resistance to employing more labour. So, job
opportunities may not increase in the private sector as rapidly as some would expect.39

e) Availability of Talent Pool: Then arises the question of the availability of talent pool in the
target group. For the last 50 years it has not been possible for the SC/STs to enter IITs &
IIMs in significant numbers because of the very high standard of tests prescribed. The private
sector makes large recruitments from IITs and IIMs. If qualified SC/ST candidates are not
available in talent pool, they will not get benefit of reservation, because the government
cannot force the private sector to lower the standards as it will adversely affect its
productivity. The range of marks required for selection is 80- 95 % in engineering and/or
management courses, not many SC/ST candidates may qualify that range of marks.
Therefore, reservations in the private sector may not benefit a significant number of SC/ST
candidates because they are not equipped to tap employment opportunities in the private
sector. Consequently, they will have to be satisfied with unskilled and semi-skilled jobs.40

LEGAL POLICY OF RESERVATION IN PRIVATE SECTOR:

After the above mentioned discussion upon theoretical bedrock for the affirmative action in
favour of the depressed class in terms of equality of opportunity now on we shall discuss the legal
issues relating to the private sector reservation.

a) Developments till Date

The reservation policy which was for the first time adopted in the 1936 whereby reservation
for SC/STs were provided in education and government sector employment was further extended and
carried forward after Independence. The reservation policy were articulated in various Articles of the
Constitution. One aspect of reservation namely employment was raised to the stature of Fundamental
Rights under Part III of the Constitution as the outset. After Champkam Case the Parliament was
compelled to insert clause (4) in Article 15, which further empowered the State to impose reservation
in favour of socially and educationally backward class of citizens in education.

39
Ibid.
40
Ibid.
 21

These developments were, when came under judicial scrutiny, the judiciary invariably upheld
the reservation policy in relation to government sector whether in employment or in admission.
Though certain restrictions such as 50% maximum limit of reservation or exclusion of creamy layer
from the benefit of the reservation has been imposed yet the policy has been by and large adhered to.

However, in the present times since the employment opportunities are reducing in the
government and public sector enterprises because of varying reasons such as orientation of
government largely towards regulatory than to carry on business and services. Similarly, the public
sector enterprises were since making a big dent in public exchequer, the government was compelled
to disinvest them. These developments have resulted in substantial reduction of employment
opportunities for the depressed class. Besides since the public sector enterprises are disinvested they
have been turn towards the private sector and therefore private sector is also expanding. Also with
the rapid growth in the economy and heavy FDI in private sector has also resulted in expansion of
employment opportunity in private sector.

Upon this backdrop the depressed class comprising of SCs, STs and OBCs started demanding
reservation in private sector. As mentioned earlier41 there are two basis for this demand:

(a) Private sector being the part of the country is also under a moral obligation to
follow the Government policies.

(b) Private sector is still continuing to make discrimination in employment on the

ground of sex, caste, race, place of birth etc.

However, till date there is no judicial pronouncement on reservation in private sector

employment, nor there is any legislation in this field except one draft Bill of Maharastra. In this
situation it would be suitable to examine the judicial outlook in the matters of reservation in private
sector educational institution so as to draw an analogy as to what would be judicial view if the policy
of reservation is imposed in private sector enterprises.

b) Reservation in Private Educational Institutions

In the field of education, the policy of reservation in government education institutions and
government aided institutions were in prevalence prior to Independence which even continued after
insertion of cl (4) in Article 15. But when the government sought to impose reservation in private
educational institution and private unaided educational institution the matter went to Supreme Court.

The Supreme Court in following decision examined the issue in great detail.

41
Supra at page. 3
 22

(1) TMA Pai Foundation

(2) Islamic Academy

(3) P.A. Inamdar

In TMA Pai Foundation, an 11-judge bench of the Supreme Court held that a private
unaided educational institution has a fundamental right under Article 19(1)(g) with respect to the
establishment and administration of educational institutions.

Disagreements relating to the ratio of the case led to the constitution of a five-judge bench in
Islamic Academy of Education entrusted with the task of clarifying the judgment in TMA Pai
Foundation. Subsequently, a seven-judge bench was constituted in P.A Inamdar to assess the
clarification in Islamic Academy of Education and confirm the Ratio in TMA Pai Foundation. P.A.
Inamdar made it abundantly clear that the law as per TMA Pai Foundation was that “neither can the
policy of reservation be enforced by the State nor can any quota or percentage of admissions be
carved out to be appropriated by the state in a minority or non-minority unaided educational
institution”.42

Thus after these decisions the SC seized the State’s right to impose its reservation policy on
the private institutions. This critical situation created frustration among the reserved category
candidates and legislatures. Because of this very situation the parliament had to enact law about
reservation in private educational institutions.

In order to lessen the frustration among the reserved category candidates the Parliament
introduced an amendment, the Constitution (93rd Amendment) Act, 2005 in Art. 15 and inserted an
additional clause (5) in the same article which runs as follows:

“Noting in this Article or in sub clause (g) of clause (1)of Art. 19 shall prevent from making
any special provision by law, for the advancement of any socially and educationally
backward classes of citizens or for the SCs or STs in so far as such special provisions related
to their admission to educational institutions including aided or unaided by the state other
than the minority educational institutions referred to in clause (1) of Art. 30.”43

c) Validity of 15(5): Private Unaided institutions

42
Per Lahoti CJI, in PA Inamdar v State of Maharastra (2005) 6 SCC 537 at p. 538
43
Art.15(5) of Indian Constitution
 23

Hence, under Article 15(5) the State was enabled to regulate admission in private unaided
institutions, something they were unable to do after the decision in TMA Pai Foundation and the
subsequent cases clarifying it. It is important to note that although the Court in A K Thakur was
bound by the decision in TMA Pai Foundation, the change in the text of Article 15 by the
introduction of Article 15 (5) may have altered the constitutional basis of the decision in TMA Pai.

In order to bring into reality the provision of Article 15(5) the Parliament enacted Central
Educational Institutions Act, 2005. Only one of the aspects of Article 15(5) is covered by the
legislature in the Central Educational Institutions Act, while Article 15 (5) does apply to private
unaided institutions. The Supreme Court confronted with the validity of the amendment as well as
the Act of 2005 in Ashok Kumar Thakur v Union of India.44 However, the majority of the Court
declined to pronounce on the question whether the application of Article 15(5) to private unaided
institutions violated the basic structure of the Constitution. As no private unaided educational
institution was arrayed as a petitioner in A K Thakur, four out of five judges found that a decision on
this issue was unnecessary and would be properly made when appropriate parties were before it. 45
Justice Bhandari, however, chose to delve into the issue. In an elaborate justification for doing so, he
acknowledged that no unaided institution had filed a petition. Yet he noted that as the best counsels
in the country had appeared in the case he concluded that a brief from an unaided institution would
have contributed little to the arguments already before the Court. Since the question of unaided
institutions was likely to arise in the future, it was best, according to justice Bhandari, to resolve it
now rather than go through the “entire exercise de novo”.46 In light of these “extraordinary facts”,
justice Bhandari examined the validity of Article 15(5) with respect to private unaided institutions
and held that an imposition of reservation of this sort would violate Article 19(1)(g) and thus the
basic structure doctrine, and observed:

Imposing reservation on unaided institutions violates the basic structure by obliterating

citizens' 19(1)(g) right to carry on an occupation. Unaided entities, whether they are
educational institutions or private corporations, cannot be regulated out of existence when
they are providing a public service like education. That is what reservation would do. That is
an unreasonable restriction. When you do not take a single paisa of public money, you cannot
be subjected to such restriction. The 93rd Amendment's reference to unaided institutions must
be severed47

44
2008(5)SCALE1, (2008)6SCC1
45
A K Thakur, at para. 79 (Balakrishnana CJ) , at para. 138 (Pasayat J.), at para. 1 (Raveendran J.)
46
Ibid, at para 133.
47
Ibid., at para. 132.
 24

Thus he severed the 2005 Amendment’s reference to unaided institutions, 48 also on the basis
of Fundamental Right to carry on business, occupation and profession because the government may
suspend Articles 14 and 19 rights in order to implement an emergency 49 but not otherwise and hence
unreasonable restriction upon this such right is not permissible under the Constitution as he
observed:

Freedom under Article 19 belongs to individual citizens. Article 19(1)(g) provides that "all
citizens shall have the right to practice any profession, or to carry on any occupation, trade or
business." The reference to "all citizens" means that each and every individual citizen
possesses Article 19 rights. For the impugned legislation to fall, it need not touch every
sphere of society. If even one individual's freedom has been curtailed, this Court is duty
bound to entertain his or her claim. It is he or she who possesses the Article 19(1)(g) right to
carry on an occupation.50

Two important issues arise out of Justice Bhandari’s examination. First, is the majority’s
decision to avoid pronouncing on the application to private unaided educational institutions a
political move? Secondly, does justice Bhandari’s conclusions on the validity of Article 15(5) as it
applies to private unaided institutions a correct application of the basic structure doctrine? We will
address each of these in turn.

While some commentators51 have expressed surprise at the majority’s approach, generally
courts may legitimately limit their decision to resolving particular disputes before them particularly
in Constitutional cases.

However, the state action being challenged in this case is the amendment introducing Article
15(5) and the CEI Act. As the constitutionality of Article 15(5) is under review, the Court was called
upon to pronounce on the scope of its application to private unaided educational institutions. To that
extent, this was a proper issue for the Court to decide in A K Thakur. Moreover, the Supreme Court
is often found to be going beyond the issues in dispute in a particular case, and clubbing similar
cases in a manner, that allows it to pronounce on constitutional issues generally and not confine itself
to the facts of the case before it.52

48
Ibid., at para. 178.
49
See: Articles 358 and 359
50
Supra note 42, at para. 169.
51
P B Mehta, ‘It’s a Landmark’, Indian Express, April 11, 2008.
52
Sudhir Krishnaswami & Madhav Khosla (2008), ‘Reading A.K.Thakur vs Union of India: Legal Effect
and Significance, Economic & Political Weekly, July 19, pp 53-60.
 25

In the light of this track record and the nature of legal challenge before it, the refusal to
address the full scope of Article 15(5) is defensible only if it initiates a new rule of court discipline
which will be followed in all cases hereafter.

Justice Bhandari’s application of basic structure review to the scope of Article 15(5) could
not bind any future bench that will be called upon to decide this question. However, as it is the first
view expressed by the Court on the question, it is likely that the Court will look to affirm or
distinguish this view in future cases.

However, justice Bhandari’s analysis in A K Thakur finds that Article 15(5) would violate
Article 19(1)(g) which guarantees to all citizens the right to carry out any business or profession. It is
not clear from the opinion, the extent to which Article 19(1)(g) has a bearing on the basic features of
the Constitution and why Article 15(5) must comply with Article 19(1)(g) to be upheld by the Court.
We had noted earlier that the Supreme Court has held in TMA Pai that Article 19(1)(g) prevents the
state from creating reservation quotas in private unaided educational institutions.

However, this proposition of law would need to be revised in the light of the introduction of
Article 15(5). Hence, in order to hold reservation quotas in private unaided educational institutions
unconstitutional the Court will need to find a new constitutional basis for this proposition: one that
rests on the basic features of the Constitution such as equality. Hence, it seems that justice
Bhandari’s conclusion on the constitutional validity of Article 15(5) as it applies to private unaided
educational institutions is though supported by adequate reasons and it will require that a future
bench of the Supreme Court revisit the question.53

ISSUE OF CONSTITUTIONALITY OF RESERVATION IN PRIVATE SECTOR:

53
Ibid, at p. 56.
 26

The noteworthy fact here is that there are only two parties to the reservation in public sector:

a) the claimants of Art. 15 (1) and Art. 16 (1);

b) the claimants of Art. 15 (4) and Art. 16 (4)

But in respect of reservation in private sector a third party is also involved in the form of employer,
who claims protection under Art. 19 (1)(g). Therefore, it is tripartite conflict:

a) Claimants of Art. 15 (1) and Art. 16 (1) on the basis of merit;

b) Claimants of Art. 15 (4) and Art. 16 (4) on the basis of equal opportunity and under-
representation;

c) Claimants of Art. 19(1)(g) on the ground of right to carry on business, trade and occupation
and such reservation amounting to unreasonable restriction upon such right.

From the point of view of the second party of the above tripartite conflict the point of contention are
two:

(i) Because of historical reasons being low of merit, an affirmative action must be made by
State in private sector;

(ii) Even meritorious they have been discriminated on the ground of their caste in the private
sector.

In answer to the first contention of the depressed class, in the light obtained from the
discussion of the above judicial pronouncements when applied to the law in respect of private sector
employment we arrive to the conclusion that in the present structure of the Constitution and the law
which has been laid by higher courts, the protection could not be granted in form of compulsory
reservation in private sector upon the same formula in which it is at present in application in
Government employment.

Upon the second contention, the answer is that the problem of discrimination cannot be said
to require reservation because Article 16 (1) itself the rule against discrimination on the ground of
caste and in order to secure the compliance of this rule suitable mechanism can be devised and
reservation is not the only solution.

But in spite of the both answers it is very much true that affirmative action in India has not
reached to the stage where it should be given up. The existing affirmative action programme in India
is though caste-based but the arguments for continuing affirmative action for SCs and STs are as
follows:
 27

1. Inter group economic disparity: A large number of livelihood and standard of living linked
indicators establish persistence of disparity of a high order between SC/STs on the one hand and the
rest of the population on the other. The disparities are evident in educational attainment, labour
market outcomes (wages as well as occupational attainment), and other measures such as the “Caste
Development Index” (CDI) based on five indicators of standard of living (land holding, occupation,
education, ownership of consumer durables, and of livestock), based on the data from National
Family and Health Survey.54

2. Dalits continue to suffer from a stigmatized ethnic identity due to the label of untouchability and
resultant social backwardness. Human Rights Watch55 amply demonstrates the aspects of violence,
exclusion and rejection that Dalits continue to face in contemporary India. There is evidence to
suggest that this stigma can affect economic performance adversely, thus perpetuating caste based
inequalities. A social identity – a product of history, culture and personal experience of
discrimination–creates pronounced economic disadvantage for a group through its effect on
individuals’ expectations.56 In controlled settings, in which any possible difference in treatment
towards castes was removed, social identity affected behaviour largely because it affected
expectations. Thus, their findings provide “evidence for an additional explanation, beyond
differences in access to various resources (emphasis in the original), for the tendency for social
inequalities to reproduce themselves over time”.

3. If equality of opportunity between castes is the objective, then affirmative action is needed to
provide a level playing field to members of SC/ST communities.

4. Finally and arguably, social policy ought to compensate for the historical wrongs of a system that
generated systematic disparity between caste groups and actively discriminated against the
underprivileged.

5. Caste based discrimination in labor, land, capital and consumer goods markets, continues both in
urban and rural areas. In labour market, this is manifest both as wage discrimination and job
discrimination. Formal studies of wage and job discrimination have noted discriminatory gaps in

54
Ashwini Deshpande (2001): “Caste at Birth? Redefining disparity in India”, Review of Development
Economics, 5:1, February, pp. 130-144. See also Ashwini Deshpande (2007): “Overlapping identities
under liberalization: gender and caste in India”, Economic Development and Cultural Change, 55:4, July,
pp. 735-760.
55
Human Rights Watch: “Broken People: Caste violence against India’s “untouchables”, (1999) Human
Rights Watch, New York.
56
Karla Hoff and Prinyanka Pande: “Belief Systems and Durable Inequalities: an experimental
investigation of Indian caste”, World Bank Working Paper(2004) available on
http://econ.worldbank.org/working_papers/36689/
 28

earnings, in both the formal and informal sectors, of a very high order 57 One study of students from
three elite universities in India, provide evidence for continuing caste based discrimination in urban,
highly skilled, upper end labour markets – markets that are supposed to be meritocratic and where
caste is believed not to matter.58

On the basis of above arguments and the conclusions arrived in objective studies we can say that the
opportune time has not come to complete blot the current reservation policy, but there is definitely a
need that in order to further the affirmative action policy in private sector employment some other
mechanism should also be examined. The alternative mechanism has been discussed in the
succeeding part.

Group Equality versus Individual Equality

Mandal Commission, 1980 using 1931 Census figures identified the OBCs and arrived at conclusion
that 52% population is OBC and recommended for 27% reservation due to 50% ceiling limit. About
two decades have been passed since application of these recommendations yet the position of OBCs
has not improved according to the expectations. Recently in order to assess the social, educational
and economic status of Muslims in India, the government appointed a Committee headed by Justice
Rajinder Sachhar.

This Sachhar Committee came up with quite glaring figures regarding Muslims who are also
included in OBC list along with the figures on SCs/STs. It provides a comprehensive account of the
disadvantaged and stigmatized conditions of the Muslim community in India. The report notes that
Muslims rank slightly above SC-STs but significantly below other Hindus in almost all indicators of
development. While there are several general programmes directed at the poor, evidence suggests
that Muslims have not benefited, commensurate with the needs of the community.59

When compared to the SCs/STs the growth in literacy for Muslims was lower than for the
former. The female urban enrolment in literacy ratio for the SCs/STs was 40% in 1965 that rose to
83% in 2001. The equivalent rate for Muslims—that was considerably higher in 1965 (52%)—
recorded a figure of 80%, lower than the figure for the SCs / STs. According to the Sachar
Committee’s findings, 25 % of Muslim children in the 6-14 age-group either never went to school or
else dropped out at some stage. Muslim OBCs fall below the Hindu OBCs in all categories. General

57
S. Madheswaran and Paul Attewell (2007): “Caste discrimination in the Indian urban labour market:
evidence from the National Sample Survey”, Economic and Political Weekly, Vol.42:41, October 13,.
58
Ashwini Deshpande and Katherine Newman (2007): “Where the path leads: the role of caste in post
university employment expectations”, Economic and Political Weekly, Vol. 42:41, October, pp. 4133-4140.
59
Report of Prime Minister’s High Level Committee on Social, Economic and Educational Status of the
Muslim Community of India constituted by the Ministry of Social Justice, Government of India, 2006
 29

Muslims far the worst being behind both Hindu and Muslim OBCs. According to the Sachar, only
one out of 25 undergraduate students and one out of 50 post-graduate students in ‘premier colleges’
are Muslims. The percentage of graduates in poor households pursuing post-graduate studies is
significantly lower for Muslims: Hindus General (29%); SCs/STs (28%); OBCs (23%); Muslims
(16%). The unemployment rate among Muslim graduates is the highest among all Socio-Religious
Categories, poor as well as non-poor. Similarly, Muslims have a considerably lower representation in
jobs in the government including those in the PSU compared to other Socio-Religious Categories.
According to these findings, in no State of the country the level of Muslim employment is
proportionate to their percentage in the population.60

Though above figures are in respect of Muslims, which are also included in the list of OBCs leaving
only one or two castes amongst Muslims out of the list. These finding succinctly point out that the
policy of reservation based on the determination of SEBCs by the Mandal Commission has failed to
fulfill its objective. The Mandal Commission as seen earlier, has primarily taken caste and group
social, educational and economic status as the basis of determination of backwardness of citizens as a
class. It did not gave any heed to the individual status of the member a particular class etc. Besides,
the reservation on the basis of religion has been held constitutionally invalid in Champakam Case61
and In re-Kerala Educational Bill cases62. Therefore, in present setup reservation in private sector is
constitutionally invalid. In order to validate constitutionality of affirmative action in form of
reservation we have to look for other methods of affirmative actions which are vogue in other parts
of the world and recommendations of various committees set-up by the government of India in this
regard.

Though in USA the affirmative action is discussed but it is needed to remind that it is largely based
on diversity index as it is found that increasing divesity would enhance the performance. The
benefits go beyond representational justice. As the US SC noted in respect of education in Grutter vs
Bollinger63, a diverse “admissions policy promotes cross racial understanding, helps to break down
racial stereotypes, and enables students to better understand persons of different races. These benefits
are important and laudable, because classroom discussion is livelier, more spirited, and simply more
enlightening and interesting when the students have the greatest possible variety of backgrounds.”
Similar benefits may be seen in a diverse workforce.

Individual Backward in Contrast to Group Backwardness:

60
Ibid.
61
AIR 1951 SC 226
62
[1959]1SCR995
63
539 US 306 (2003), 330
 30

It all started with the Justice Rajinder Sachar Committee 64 realising that the backwardness of Indian
Muslims is a result of a larger institutional and societal context, it made two specific
recommendations designed to benefit all vulnerable groups, not just Muslims:

(1) ...the Committee recommends that an Equal Opportunity Commission (EOC) should be
constituted by the government to look into the grievances of the deprived groups,

(2) enhancement of diversity in different spaces should be seen as a larger policy objective...
The idea of providing certain incentives to a “diversity index” should be explored.

This out-of-the-box thinking that went beyond reservations in public employment and education
were necessary because of the constitutional impermissibility of reservations for religious groups.
Two separate expert groups were set up as a follow-up measure to look into these two suggestions in
further detail. The issue examined by both the expert groups as well as their findings are discussed in
succeeding two heads:

1. Promoting Diversity

In a non-discriminatory world, all public spaces will be diverse (public “spaces” include privately
owned business, housing societies and schools since the functions they perform are of a quasi-public
nature). If hiring, admitting, leasing and selling policies are non-discriminatory, the social mix of a
workforce, students or housing society will roughly reflect that of the society itself. Since this is not
the case, positive action is needed. The second expert group, chaired by Amitabh Kundu submitted
report in June 2008 to “propose ‘diversity index’ and to work out the modalities for implementation”.
The Kundu report recognised that the Sachar report’s impact would be wider than its principal
objective. While the Kundu report discussed in this section is more directly concerned with the
representation of various groups in the workforce, anti-discrimination legislations definitely augment
other measures to encourage diversity. But the latter have their main value in promoting a national
culture that is intolerant of unfair discrimination. This battle of minds is perhaps more, if not as,
important as the battle of numbers.65 The Kundu report argues thus:

The case for increasing social diversity in public spaces can be built on the notion of a fair
demographic representation for all groups of population. Groups that are subjected to
discrimination in society tend to get under-represented (as compared to their proportion in the
population) in several public spheres. This leads to inequity and alienation resulting in
resentment and frustration among the excluded population. These could assume violent and
64
Supra note 57
65
Report of the expert Group to Propose a Diversity Index and workout the Modalities of
Implementation submitted to Ministry of Minority Affairs, Government of India 2008
 31

secessionist expressions, leading to disruption in social and political life, with serious
negative consequences for growth, development and social harmony...66

There are numerous cases when the individual characteristics have been rendered either secondary or
completely redundant in determining her/his access to these institutions as group identities
overwhelm or dictate the decision-making process.

Diversity, although linked to discrimination, is an independent concept. As the Kundu report

emphasises, its main concern is the “Concentration or clustering of populations with similar socio-
economic, religious and ethnic characteristics in geographical, social, political and institutional
spaces...” A concentration of minority groups in a public space is as regrettable as that of a majority
group. As such, diversity transcends the majority-minority divide.67

The Kundu report does not restrict the sensitivity of diversity to religion alone. The report
recommends a diversity-index which is sensitive to caste, religion as well as sex in a given public
space. It calculates the “diversity gap” in a public space by comparing the actual intake of members
of a particular religious, caste or gender group in a given institution to the “population who are
eligible to enter the institution” and not to the general population.68

While admitting that a low number of eligible members itself may be a result of discrimination, the
report justifies this as a pragmatic compromise because “an individual institution has limited role to
play in changing that”.

The diversity gap is designed to ensure that only social exclusion is corrected – so, only if a
community is under-represented in proportion to its eligible population will the institution be
rewarded for enhancing its participation. If a community (even if a minority) is already over-
represented in a given institution, it cannot claim any benefits.69

Once diversity gap has been identified in an institution, the report recommends that those institutions
which take measures to bridge the gap should be rewarded by the state with incentives, concessions,
access to public land and resources, tenders, export quotas, preferences, advertisements, etc; while
those institutions that ignore the diversity gap are not punished but do not get the benefits either.70

The report identifies three sectors to push for diversity – education, employment and housing. It
recommends:

66
Ibid
67
Supra note 3
68
Ibid
69
Ibid
70
Ibid.
 32

(1) Incentives in the form of larger grants to those educational institutions that have higher
diversity and are able to sustain it over time. These incentives can apply to both colleges and
universities, both in public and private sector.

(2) Incentives to provide the public and private sector enterprises and institutions to encourage
diversity in their workforce. While such initiatives should be part of the corporate social
responsibility, some affirmative action may help initiate this process.

(3) Incentives to builders for housing complexes that have more “diverse” resident populations
to promote “composite living spaces” for “socio-religious communities”.71

Thus, the implementation scheme is based only on carrots, not sticks. The concept has been
employed in various other countries. In a recent book entitled Buying Social Justice Christopher
McCrudden (2007) draws on jurisdictions as diverse as the US, Malaysia, the European Union,
Canada and South Africa to provide an excellent empirical analysis of the way in which they have
tried to balance private freedom with social goals, by “buying” social justice. Instead of relying on
their “imperium” (power of sanction), these jurisdictions have relied on their “dominium” (power of
purse) to achieve social justice goals. The idea is an intelligent compromise between entrepreneurial
freedom and social justice, and is a useful one to try out in India.

The report suggests that “this approach has greater flexibility than the system of reservations. The
diversity-based incentive system, first and foremost, creates awareness. It sets the goal towards
which the institutions would work, and while these goals may not be achievable immediately,
institutions must try and achieve them gradually, within a reasonable period of time.” It further
argues that reservations might make sense in “certain specific situations” but the diversity approach
is “a more effective and, we hope, a more acceptable solution” for “long term... systemic change”.72

2 Prohibiting Discrimination

The second expert group73, chaired by Madhava Menon, was asked to “examine and determine the
structure of an Equal Opportunity Commission”. It submitted its report in February this year.

The main focus of the EOC proposed by the Menon report will be to weed out discrimination against
members from “deprived groups” identified by an objective deprivation index, and defined by “sex,
caste, language, religion, disability, descent, place of birth, residence, race or any other...” ground.

71
Supra note 63
72
Supra note 3
73
Report by the Expert Group to examine and determine the structure and functions of an Equal
Opportunity Commission Set up by the Ministry of Minority Affairs, Government of India, 2008
 33

Thus, the eligibility requirement for protection by the proposed law is deprivation based on an open-
ended list of irrelevant personal characteristics.74

The final residual clause “or any other” is a place-holder for other analogous autonomy-infringing
grounds that may be filled in later. Although this foresight is commendable, it will be a good idea to
expand the list to include currently known analogous grounds like “sexual orientation, marital status,
food preference, age, dress preference, gender identity, pregnancy”, etc, while still retaining the
residual clause.75

The proposed bill in the Menon report also recognises that deprivation is contingent. What is today a
deprived group may not be so tomorrow. Protection will be dependent not on the much maligned
“vote-bank politics” but on a principled demonstration of deprivation through the deprivation index.
Further, the bill recognises our multiple identities by moving away from a focus on single interest
groups and instead arriving at the generic idea of “deprived groups”.

One may be rich, male and able, but a Muslim religious identity may result in being discriminated
against nonetheless. Again, a dalit lesbian woman carries several depriving identities, the totality of
which cannot be captured by a single issue oriented law.

This design is not only morally better but also has a more universal appeal –with the rich and
complex diversity of human identities, most of us are more likely to see ourselves as potential
victims of illegitimate discrimination rather than as perpetual non-beneficiaries. This raises the
possibility of empathy with victims of discrimination rather than empathy failure caused by divisions
between us-and-them.76

In its potential impact, the Menon report is the least ambitious of the three suggestions being
discussed here. It only goes so far as imposing a negative obligation on public as well as private
bodies: refrain from discriminating unfairly. There is no positive requirement to do good. This is
what makes it possible to have a long list of beneficiaries – unfair discrimination against anyone is
wrong. But it is particularly wrong against a member of a deprived group, because by definition they
have few opportunities available to begin with.77

The Menon committee is, correctly, “of the firm opinion that the jurisdiction of this Commission
should not be limited to the public sector”. Yet, citing incremental sectoral progress, it suggests that
only employment and education should be the initial focus of the EOC. The deferment of its

74
Ibid
75
Supra note 3
76
Ibid
77
Ibid.
 34

application to the housing sector to a later date is unfortunate, given rampant discrimination on the
grounds of religion, caste, food preference and marital status existing in that sector.78

To what extent anti-discrimination legislations can help eradicate structural injustice in the short-
term is debatable. Driven as they usually are by complaints from victims, even a very effective
enforcement mechanism can only be expected to deal with only a limited percentage of existing
discrimination in society and that too after the discrimination has taken place. This has been
addressed to a limited extent by the Menon report which seeks to grant a broad policymaking role to
the proposed EOC.

CONCLUSION

Reservation has become a controversial issue these days owing to politicization of this issue in India.
Apart from this, the dwindling condition of government jobs with the advent of globalization,
liberalization and privatization has aggravated the condition. Actually, the policy of reservation can
be reaped and utilized only in government sector. But a big question has arisen that what would
happen when there would be no scope of getting jobs in case of lack of government jobs. Because
the governments opportunities are shrinking due to heavy disinvestment policy pursued by the State.
78
Ibid.
 35

This issue has in turn given rise to issue of providing reservation in private sector. But private sectors
have been adamant to eschew introduction of this defective policy in their domain. Their contention
is that reservation is based on anti-merit policy, and that is why it would badly affect the quality and
credit of their working.

This is a stark reality that jobs in government sector is decreasing but only this reasoning cannot be a
convincing ground for introducing reservation policy in private sector. A pertinent question in this
juncture arises that what was the main reason behind privatizing any sector. The easy answer to this
would be to maintain quality and bring sharpness in the sector which was lacking in case it was
government owned and regulated. Therefore, it is humbly suggested in the line of the proposal of
private sector that the stakeholders of reservation can be given some sort of monetary or pre-joining
training by these sectors rather than taking them directly in the garb of reservation or so called
affirmative action.

Further, it is argued that the vacuum created by closing of government sectors has taken away all
hopes of the claimants of reservation to get a government job and mingling themselves in the
mainstream of society. In response to this argument it can be said that the need of hour is to make a
more feasible policy to strike a balance between the interest of claimants and the interests of private
sectors. This will truly help in securing the goals of constitution and the interests of private sectors.

Another related finding is that the Constitution was framed in way back in 1950s and it was guided
only by the ethos of communism and socialism and did not ever considered capitalism as basis of the
framework which was devised. Therefore, the provisions of the Constitution were reflection of
socialistic pattern of society in which maximum benefit to maximum number was the guiding
principle. Ultimately with 42nd Amendment the socialism became one of the basic features of the
Constitution. Therefore, the constitutional provisions which framed for the inclusive development of
the country are now found to be worthless in the present era of globalization, liberalization and
privatization.

Apart from that the private sector would also suffer from the discrepancies and demerits existing in
the present formula. Therefore, it would also suffer from the inefficiency, lethargicity, red-tapism,
corruption resulting into low productivity ultimately failure of the enterprise as we have seen in the
past in respect of public sector enterprises. Besides the political motives would always play a
determinant role in any action taken by the private employer against the delinquent or inefficient
employee availing reservation.
 36

All this brings us to an irresistible conclusion that the present framework of constitution or law
reservation in private sector employment in present form is constitutionally invalid.

The discussion upon the three recent committees and their recommendations clearly shows that it is
no more feasible to continue the backward looking affirmative action scheme as it has failed to
deliver the expected results and hence the second affirmative action scheme could be more effective
in achieving the goals of social and substantive equality. At the first this scheme can been applied at
an experimental basis in the private sector and if found to be more suitable to the present scheme it
could also applied in the public and government sector employments.

In spite of the good effort of the Menon group the implementation aspect suffers from certain
lacunae. In place of various existing commissions for ST/SC/OBC/Women/ Disabled persons one
EOC could cover the area of coverage by these numerous commissions.

Still it is commendable that the voices of dissidents of the present reservation policy has now been
officiated by these three committees/expert groups. The proposal if applied in private sector, it would
neither create much of euphoria as direct benefit of enhancement of diversity will be a motivational
factor for the private sector enterprises while the negative requirement against discrimination on
irrelevant grounds would ensure that the eligible aspirants from the depressed and vulnerable class of
citizens are not discriminated and afforded an equal opportunity of employment.

BIBLIOGRAPHY

 Amarnath Mohanty, “Affirmative Action in India: An Alternative Perspective”, Economic &

Political Weekly, Vol. 42, No. 30, July 28, 2007
 Prakash Louis, “Affirmative Action in Private Sector”, Economic and Political Weekly,
August 2008
 Sthabir Khora, “Reservation in Private Sector Employment – Is it Justified”, The Voice: An
International Referred Research Journal, Vol. 4, No. 2, April-June 2017
 Tarunabh Khaitan, “Transcending Reservations: a Paradigm Shift in the Debate on
equality”, Economic & Political Weekly, September 2015 pp.8-12
 37

 G Thimmaiah, “Implications of Reservations in Private Sector”, Economic and Political

Weekly, February 2005