Don’t build walls

Don’t build walls

Madhya Pradesh move to reserve jobs for locals will not help, only hurt
Madhya Pradesh chief minister Kamal Nath has made it mandatory for all industries established there with the help of incentives provided by the state government to reserve 70% of jobs for locals. This is regressive. At a time when GST has dismantled fiscal barriers to create a common market, MP has taken a step to create barriers in the labour market. Unfortunately, bad ideas have traction. Gujarat government last year promised to introduce a law which would make it compulsory for companies to reserve 80% of jobs for locals.

Votaries claim this regressive step is a solution to the unemployment problem. In reality it is nothing more than a system of rationing jobs in a provincial way. Rationing has never led to prosperity or created an economic environment which led to job creation. Moreover, this economic choice runs counter to the idea of a nation. All states in India are intertwined economically. Employment is part of this equation. It’s not possible to carve out employment from the economic equation and treat it as something which can be ring-fenced from the rest of the country.

For sure, India is in the midst of a jobs crisis. But the step the Kamal Nath government has taken could worsen the situation. If other states begin to follow this route, it will lead to serious social problems. MP workers in other states could become unsafe too. Instead of reserving jobs, the MP government needs to look at ways in which the total number of jobs can increase. Industrial policy can be used as a tool to incentivise more labour intensive manufacturing. Congress president Rahul Gandhi must persuade his party colleague to roll back this measure. Also, Gujarat chief minister Vijay Rupani should keep in mind that many migrant workers contributed to the state’s prosperity.