Why the Private Sector Is Immune to the Constitutional Goal of Social Justice

There is a growing need to discuss the constitutional immunity that the private sector has enjoyed, even as it has deepened caste cleavages in India.

The judgment offered in the EWS case legitimised a quota-based reservation for the economically backward section of the society who haven’t suffered historical discrimination. The majority bench advocated that other non-targeted affirmative actions, such as programmes intended to uplift the poor, are not sufficient, and hence, the quota-based reservation was considered as a viable interim remedy measure.

However, an observation by Justice Dinesh Maheshwari, who was the only judge in the bench to ask if private educational institutions are mandated to follow the EWS reservation, was, surprisingly, not discussed much.

Justice Maheshwari observed that under Article 15(5) of the Constitution of India, the state has the power to mandate reservation in privately managed institutions. “Unaided private institutions, including those imparting professional education, cannot be seen as standing out of the national mainstream. As held in the aforementioned judgments, reservations in private institutions is not per se violative of the basic structure. Thus, reservations as a concept cannot be ruled out in private institutions where education is imparted,” he said.

In June, the current Chief Justice of India, D.Y. Chandrachud, in a lecture in the UK, had said that the role of the state as the primary employer has transitioned into being a facilitator for the private sector in economic activity over the last three decades. Still, he added, that the constitution’s provisions against discrimination in public employment exist only against the state. This, therefore, leads to the pertinent question if there’s a need for a comprehensive anti-discrimination law that applies to the private sector too.

Immunity to the private sector from the constitutional responsibility of removing discrimination has become the biggest bane in post-liberalisation India, helping the Brahminical hierarchy make deeper inroads than before. The private sector has assumed the primary role of employer without much social responsibility or constitutional mandate. There is a growing need to discuss the constitutional immunity that the private sector has enjoyed, even as it has deepened caste cleavages in India.

The constitutional control over the ‘social’ aspect of the private sector assumes greater importance on two counts. One, the private sector has assumed commanding heights in the economy. Two, the government’s increasing tendency to put out the red carpet to private capital has surpassed even the equality code, the DNA of the constitution.

Such complicity of the private sector in perpetuating caste discrimination was first highlighted during the World Conference Against Racism held in Durban in 2000. By then, the impact of privatisation and globalisation policies in the economy was already showing its devastating effect on distributive justice.

More than 1 lakh jobs, otherwise reserved for the Scheduled Caste and Scheduled Tribe communities, had been lost due to privatisation. But the then Bharatiya Janata Party-led Vajpayee government had refused to admit caste hierarchy as a form of discrimination, and even claimed that in India, caste discrimination was a story of the past.

Nevertheless, the debate and demand for the extension of the reservation or any other form of “affirmative action” to the near monopoly of ‘upper castes’ in the private sector gained momentum. As a result, both the BJP and the Congress-led United Progressive Alliance had to promise some sort of attention to the question of social justice in the private sector in their election promises.

The UPA government, which came to power in 2004, promised in its Common Minimum Programme (CMP) a wider national-level discussion and consultation with business associations, state agencies, and the civil society on the question of affirmative action in the private sector. The immediate reaction from the ‘upper caste’ dominated India Inc betrayed its pretension of civility. The then president of the Confederation Of Indian Industries (CII), Sunil Kumar Munjal had said:

“We cannot be forced to take individuals who don’t have the required skills. We cannot afford to compromise on efficiency. That would affect our competitiveness. We cannot compromise on merit. Corporate sector does not go by colour of skin, caste or the last name.”

But the then chairperson of the University Grants Commission, professor Sukhadeo Thorat, and academician Paul A. Attewell established through their field-level experiment how false these claims were.

Their experiment documented a pattern of decision-making by employers that repeatedly favoured job applicants from the Hindu, higher-caste backgrounds, which was revealed in their ‘last names’, and discriminated against lower caste and Muslim job applicants with equal qualifications.

The field study found that an applicant with a ‘last name’ reflecting a Hindu ‘upper caste’ got more opportunities than an applicant with a Muslim ‘last name’ with similar qualifications.

Also read: Research Finds Stark Discrimination Between Hindu and Muslim Women While Job Hunting

Another study by the economist, Ashwini Deshpande, and by the sociologists, Katherine Newman and Surinder S. Jodhka, has shown that the access to productive employment and well-paying jobs in the private sector remains confined to the privileged sections of society.

Based on a sample of the top 1,000 companies listed on the Indian stock exchange, a 2010 study showed that caste diversity was non-existent in the Indian corporate sector and 65% of the Indian corporate board members were from just one ‘upper caste’ group.

A 2019 study conducted by the Azim Premji University found that the SC/ST communities were “over-represented” in low-paying jobs and “under-represented” in high-paying ones. The study, thus, suggests that this massive under-representation of the marginalised sections in private sector employment couldn’t have been possible without discriminatory and biased corporate HR policies.

When these findings established a strong case for some regulatory actions by the government, India Inc declared that they would adopt a Voluntarily Code of Conduct (VCC), according to which, they would take up measures to ensure social justice in their organisations.

The Apex Industry Associations, namely the CII, Federation of Indian Chamber of Commerce and Industry (FICCI) and Associated Chambers of Commerce and Industry of India (ASSOCHAM), prepared a VCC for their member companies centered around inclusive education, employability, entrepreneurship and employment. A coordination committee for affirmative action for the SC and ST communities in the private sector was set up by the government in 2006.

Poor implementation of ensuring social justice

During the ten-year regime of the UPA government from 2004-14, the coordination committee held only seven meetings. Meanwhile, when the Congress manifestos in 2009 and 2014 general elections mentioned the promise of building consensus over extending reservation to the private sector, the CII declared that it would “discuss with the Congress party because we believe that at this point, reservation in the private sector will impede the competitiveness of our industry”. Thus, the UPA stopped nudging the private sector beyond holding “infrequent” meetings without pursuing any agenda.

The Narendra Modi-led government didn’t hold any meeting with the coordination committee until 2018.

Just a year before the general elections, a nationwide movement against unemployment, agrarian crisis, and the demand for reservation in public employment had started in the country. That’s when the debate on reservation in the private sector gathered momentum again.

Following this, the Modi government held its first-ever coordination meeting with the Indian business houses on affirmative action.

Even then the Modi government just documented the figures provided by the business associations about the affirmative actions that they carried out, without any verification, and expressed satisfaction about it.

During the earlier coordination committee meetings, the Indian corporate houses had promised the government that they would initiate affirmative actions by helping out in education, employability, entrepreneurship and employment.

India Inc shows most of the mandatory corporate social responsibility activities under education, scholarships, skill training leading to employability, and successful entrepreneurship. These activities are not quantifiable and are intangible.

The actual quantifiable criterion to judge the commitment of the private sector is actual employment of the people belonging to the SC/ST communities.

Also read: Why Is There No Upper Caste Outcry When Merit Goes for a Toss In the EWS Quota?

The Modi government has now established a record of being completely in sync with the interests of India Inc. That has reflected in the uncritical defence of the private sector’s poor implementation of ensuring social justice.

Answering a question in the Rajya Sabha on January 2, 2019, junior commerce and industry minister, C.R. Chaudhary, had expressed his satisfaction with the affirmative actions taken by the Indian corporate houses. He had said, “Measures undertaken by the members of Industry Associations, inter-alia, includes scholarships, vocational training, entrepreneurship development programmes and coaching.”

In the same speech, he had presented an annexure detailing the affirmative action undertaken by some corporate associations.

Between 2006-2018, the ASSOCHAM, CII and FICCI claimed to have provided scholarships, free education, and vocational training to 1.73 lakh, 1.36 lakh, and 6.5 lakh students belonging to the SC, ST, and OBC communities, respectively. However, in the same period, only 1.27 lakh students were given employment, which would amount to less than 10,000 jobs per year.

There are other problems as well. As journalist Arun Sinha questions in his recent article in Deccan Herald, neither the companies disclosed nor did the Modi government verify whether these jobs were given to the candidates whose education and training it supported each year. Or if they were hired in the low-paying jobs where SCs and STs were already over-represented, and counted it as affirmative action. Or if contract employees were included in this figure.

Even after 13 years of pompous declaration of “affirmative action” by the Indian corporate houses, only about 19% of the 17,788 member companies of the three trade associations have adopted the VCC.

A 2021 Reserve Bank of India report titled Employment in Public and Organised Private Sectors inadvertently points out the necessity of bringing the private sector under the ambit of quota-based reservation system to ensure social justice.

This report provides the break up for employment in the public and private organised sector from 1980 onwards. However, it does not have that data for the period after 2013. But still, the trend is obvious.

Between 1991-2012, more than 20 lakh jobs were lost in the organised public sector. With 50% reservation in the public sector it would mean that at least 10 lakh families belonging to the SC, ST and OBC community have lost their opportunities. This would have increased by at least twofold since the Modi government, after 2014 and especially after 2019, is on a privatisation spree.

Social justice movements have increasingly feared that increasing privatisation may lead to a complete decline of opportunities for the historically marginalised caste groups. A quota-based reservation system in the private sector in this context becomes not only necessary but also inevitable.