The perils of domicile-based preferential policies


From UPSC perspective, the following things are important :

Prelims level: Article 16(3)

Mains level: Paper 2- Domicile-based preferential policies and issues with it

The Haryana government is considering a Bill that provides for 75 per cent reservation to the residents of the state. This article discusses the challenge such policies poses.

Domicile-based preferential policies on rise

  • The Haryana government’s State Employment of Local Candidates Bill 2020 reserves 75 per cent of new jobs in private establishments for Haryana residents.
  • Andhra Pradesh has mandated 75 per cent reservation for locals.
  • Karnataka is considering reserving all blue-collar jobs for locals.
  • Madhya Pradesh has announced that public employment in the state be reserved for state residents.

Constitutionality of such policies

  • The Constitution prohibits discrimination based on place of birth.
  • The right to move freely in the country and reside and settle in any part of it, the right to carry out any trade or profession, are all established rights.
  • Article 16(3) does, in principle, enable Parliament [ not state legislature] to provide for domicile-based preferential treatment in public employment.

Judicial scrutiny

  • The constitutionality of domicile-based employment preferences (unlike preferences in education) has never been frontally tested.
  • But almost all the existing case law that impinges on the matter clearly indicates such laws are unconstitutional.
  • In Pradeep Jain vs Union of India, the court had indicated this direction; in Kailash Chandra Sharma vs State of Rajasthan, the court had warned against parochialism.
  • The Andhra Pradesh Bill is sub judice in the high court.

Issues with the policies

  • The Supreme Court will hopefully rule on the constitutionality of the  Haryana government’s Bill.
  • But the Bill has ramifications beyond constitutionality.
  • First, because this kind of constitutional cynicism is now not an exception but has become a contagion.
  • Second, even if the Bill is struck down, such a high wire act is meant to fuel the flames of localism.
  • Third, the Bill now exposes the bad faith of political parties on private sector reservation more generally.
  • Fourth, these bills will open up a new form of competitive ethnic politics.
  • It is odd that a state like Haryana which has benefitted from being part of a cosmopolitan zone like NCR should unilaterally impose reservations.
  • Fifth, there is patent class discrimination: If you are rich, privileged or highly skilled, there are no entry barriers in accessing any labour market.
  • But we shall put entry barriers on lower skilled migrants; our own internal version of an H-1B visa.
  • The greatest damage the Bill does is to increase the discretionary power of the state, almost taking us back to a license permit raj, where companies will have to bargain, or worse, bribe the state for exemptions.
  • This is the antithesis of regulatory reform.

Consider the question “There have been growing tendencies among the states to pursue domicile-based preferential policies. What are the issues related to such policies?”


But the fact that states feel the need to enact these bills is an indictment of the economy as a whole: They suggest a pessimism about both education and job creation. So we have returned to a world of zero sum thinking.

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