December 7, 2023


Should quotas/reservations apply to the private sector?

Job creation is one of the more important and trickiest tasks for a government, be it state or central. How do you ensure there are good quality jobs while making sure everyone has a shot? It’s a conundrum that has plagued governments for a long time. In the public sector, one answer to the question of equality has been reservations and quotas. They’ve not been without their fair share of controversies.

The private sector is another ball game altogether. Given we’re entering an election year, there’s bound to be a lot of debate and discussion on whether reservations are needed in the private sector. Should we just emulate what’s being done in the government/public sector? Would that be too disruptive?


A year before the 2019 elections, the Prime Minister’s Office (PMO) held its first-ever meeting to discuss affirmative action in the private sector. It seems officials raised concerns about the private sector’s commitment to provide jobs to Schedule Castes (SCs) and Scheduled Tribes (STs). The meeting was seemingly convened in the wake of nationwide protests by Dalits, Jats, and Marathas.

The issue of reservations in the private sector isn’t new. In October 2006, under the UPA-I government, a high-level coordination committee was constituted under the Principal Secretary to the Prime Minister. The Confederation of Indian Industry (CII) analysed the situation and submitted a report that stated Indian industries were committed to voluntary initiatives under four Es – education, employability, employment, and entrepreneurship.

According to the industry, this would ensure equal opportunities for the SC and ST community. Take Tata, for example. In 2007, it adopted the Tata Affirmative Action Programme. This was easier said than done. The biggest challenge was identifying those who were eligible and training them.

On the issue of upward mobility of historically oppressed groups, the United States has found some admirers. There, Affirmative Action was an Executive Order that was signed by President Lyndon Johnson in 1965 as part of his Great Society initiative. The goal was to encourage private businesses to recruit African Americans for jobs.

In the decades since, American conglomerates have instituted several policies to ensure their workforce is more diverse. Let’s see a couple of examples. In 2020, Apple filled 43% of its open leadership roles and 29% of R&D roles with people from underrepresented communities like African Americans, Hispanics, etc. Microsoft has done something similar. As Black Lives Matter came to the fore, companies accelerated their efforts.

Back home, reservations in the private sector were seen as central to the advancement of Dalits. In 2002, the “Bhopal Declaration” was adopted by Dalit activists which demanded mandatory reservations in some proportion in the public sector and government institutions. However, the corporate sector has been sceptical of Mandal-style quotas. They’ve often preferred the US model.

It’s a controversial issue, for sure. In 2006, reservations for Other Backward Classes (OBCs) were enacted, also known as Mandal 2.0. There was immediate upper caste backlash. The same thing happened when the VP Singh government implemented OBC reservations in government jobs in 1990.

The issue of reservations has become intertwined with electoral politics. In the run-up to the 2024 elections, there’s sure to be more discussion and debate. But does the private sector need reservations? Is it a net good? Or is there another way?

VIEW: Need of the hour

Chief Justice of India, DY Chandrachud, during a lecture in the UK, stated that the role of the state as the primary employer has transitioned into a facilitator for the private sector over the past three decades. The Economic Survey from earlier this year stated it expects the private sector to take the lead on job creation. That means a lot of people are going to be competing for a certain number of jobs in the private sector.

Reservations in the private sector have become popular in some states. Andhra Pradesh and Maharashtra are two examples. For states, reservations in the private sector are a good thing. It’s seen as a classic tool to prevent migration and act as a device for empowerment. It gives states the chance to augment this with local skill development programs given changes in the labour market landscape. Companies are more than happy to pay for the education of SCs and STs but are reluctant to employ them.

Corporate India has continued to be relatively insular to the country’s social inequities. The question to be asked is this – does the private sector provide a level playing field to people from all castes? Several studies have shown that access to productive and well-paying jobs remains confined to the privileged. SCs and STs continue to face wage and job discrimination in private employment and the organised sector.

COUNTERVIEW: There can be a better way

There’s no arguing against wanting to provide good-paying jobs to more people, especially those from marginalised communities. Thinking on this issue is usually seen through two myopic lenses – those who don’t want any affirmative action and those who want caste-based reservations in the private sector.

One proposal is for every company to report its diversity profile every year. This would be converted into a diversity score, depending on the disadvantage of each social group. With the diversity score, the government could link its high diversity score to tax incentives or other forms of preferential treatment. While this could be a first step, the next would be making a certain diversity score an eligibility condition for state subsidies.

There’s a sense that imposing reservations on big companies could be a slippery slope. Some states and politicians are against quotas in the private sector. KT Rama Rao from Telangana said states that did implement such reservations were losing out on investments. From a company’s point of view, they see it as a hindrance to hiring the best candidates. Parties may face a quandary – gain some political dividend but alienate big business.

Reference Links:

  • PMO Holds First Meeting on Affirmative Action in Private Sector – The Wire
  • Good jobs first: Justice Chandrachud argues private sector needs anti-discrimination law. First formalise the economy – Times of India
  • Why India’s affirmative action system is broken – Hindustan Times
  • A distant dream – The Telegraph Online
  • Why the Private Sector Is Immune to the Constitutional Goal of Social Justice – The Wire
  • Job Quota in Private Sector: Vocal for Local – Indian Currents
  • Why we need affirmative action in the private sector – Mint
  • One step India can take to make private sector jobs more inclusive. And it’s not quota – The Print

What is your opinion on this?
(Only subscribers can participate in polls)

a) Quotas/reservations should apply to the private sector.

b) Quotas/reservations shouldn’t apply to the private sector.


For the Right:

‘Did Ram say kick out the poor?’ The discontent of the displaced in new Ayodhya

For the Left:

Here’s What the Congress Must Do Now to Quickly Reset the 2024 Chessboard