From UPSC perspective, the following things are important :
Prelims level : Article 16
Mains level : Paper 2- Reservation in jobs for locals
Last week, the Punjab and Haryana High Court admitted a petition challenging the constitutionality of the Act, and stayed the implementation until it heard the case.
Laws raises constitutional questions
- There are at least three important constitutional questions that arise from this Act.
 Violation of Article 19(1)(g)
- Article 19(1)(g) of the Constitution guarantees freedom to carry out any occupation, trade or business.
- There may be reasonable restrictions “in the interests of the general public”, and in particular related to specifying any professional or technical qualifications, or to reserve a sector for government monopoly.
- This Act, by requiring private businesses to reserve 75% of lower end jobs for locals, encroaches upon their right to carry out any occupation.
- In 2005, in the P.A. Inamdar case, Supreme Court said that reservation cannot be mandated on educational institutions that do not receive financial aid from the state, as that would affect the freedom of occupation.
 Violation of Article 16
- The provision of reservation by virtue of domicile or residence may be unconstitutional.
- Article 16 of the Constitution specifically provides for equality of opportunity for all citizens in public employment.
- It prohibits discrimination on several grounds including place of birth and residence.
- However, it permits Parliament to make law that requires residence within a State for appointment to a public office.
- This enabling provision is for public employment and not for private sector jobs.
- And the law needs to be made by Parliament, and not by a State legislature.
 Breaching of 50% limit
- In the Indra Sawhney case in 1992, the Supreme Court capped reservations in public services at 50%.
- It however said that there may be extraordinary situations which may need a relaxation in this rule.
- It also specified that “in doing so, extreme caution is to be exercised and a special case made out”.
- That is, the onus is on the State to make a special case of exceptional circumstances, for the 50% upper limit on reservations to be relaxed.
- It stated that the 50% limit is “to fulfil the objective of equality”, and that to breach the limit “is to have a society which is not founded on equality but on caste rule”.
- The Haryana Act does not further “caste rule” as it is for all residents of the State irrespective of caste but it breaches the notion of equality of all citizens of India.
 Against the conception of India as a one nation
- The Constitution conceptualises India as one nation with all citizens having equal rights to live, travel and work anywhere in the country.
- These State laws go against this vision by restricting the right of out-of-State citizens to find employment in the State.
- This restriction may also indirectly affect the right to reside across India as finding employment becomes difficult.
- If more States follow similar policies, it would be difficult for citizens to migrate from their State to other States to find work.
 Economic implications
- The move may potentially increase the costs for companies.
- There may also be an increase in income inequality across States as citizens of poorer States with fewer job opportunities are trapped within their States.
The courts, while looking at the narrow questions of whether these laws violate fundamental rights, should also examine whether they breach the basic structure of the Constitution that views India as one nation which is a union of States, and not as a conglomeration of independent States.