Tuesday, August 21, 2007

Indian Reservations: Entitlement Economy?

No, not Indian reservations in the United States, I'm talking about reservations in India, a government-enforced system of quotas for higher education and government jobs based on caste, religion and language. Like affirmative action in the U.S., reservations in India are highly controversial, because college admissions and job promotions are often not based on merit. In 2006, there were massive anti-reservation rallies and protests in India. India's prime minister (Dr. Manmohan Singh) has apparently suggested extending reservations/quotas to the private sector, which adds to the controversy.

The
India Economy blog clarifies the controversy about Indian reservations with this question, and commentary:

Why strive for excellence when mediocrity will suffice?

Singh's government has done nothing to improve the incentives for excellence. Why would a marginal student aspire to be in the top 5% of the class if reservations guaranteed that person a place in an engineering college as long as he made the ‘cut-off’ for his caste or group? And why would the marginal student in the engineering college attempt to score top grades, when quotas guarantee a government job? And why would the marginal government employee strive for excellence if promotions can be had with far less effort, as long as there is a quota?

Mercifully, there is no ‘chalta hai’ (Definition: anything will do; the typical Indian careless attitude, read a
story about it here) attitude in the private sector, especially in those segments that have been opened to global competition. That’s one part of India that is indeed striving for global excellence. But why would a marginal employee in a private sector factory strive for excellence when he knows that it’s virtually impossible to sack him for underperformance. Far from easing labour laws that not only stifle excellence but also prevent millions of people from securing employment, Dr. Manmohan Singh’s government wants to introduce job quotas in the private sector.

Far from creating incentives for excellence, the government is determined to create an entitlement economy. If excellence is what we seek, we must organise our society around merit.

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