CM quota plan irks industry

K V Ramana / TNN / Aug 16, 2007, 01:00 IST

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Chief Minister Y S Rajasekhara Reddy seems convinced that he can now take the risk of imposing reservations in private sector.

HYDERABAD: Buoyed by the progress the state has made in attracting investments and surpassing states like Maharashtra and Tamil Nadu, Chief Minister Y S Rajasekhara Reddy seems convinced that he can now take the risk of imposing reservations in private sector.
But industry feels otherwise. With every state now vying for investments and offering a variety of subsidies to woo investors, any effort to impose a rider would derail the process, industry sources feel.
The CM on Monday said the government was examining the private sector reservation model put in place by the Uttar Pradesh government.
The UP government plans to ask the industry to reserve about 30 per cent jobs for the disadvantaged, including SCs and STs in select sectors, making it mandatory for the industry to claim subsidies and tax sops.

"There is already a shortage of skilled manpower in several sectors. If the government wants to accommodate the disadvantaged in the industry, it should first make them employable. In fact, within the industry, caste or community doesn’t make a difference as long as the employee is able to perform,” CII’s AP Chapter chairman Pradeep Dobhale said.
Dobhale, who heads ITC’s paper division, said at the firm’s Bhadrachalam plant 15 per cent of the staff are from disadvantaged groups. "Even if the government wants to impose the policy, it should be done on a case to case basis, not as a blanket rule. The projects have to be examined and those requiring high skill levels should be exempted from such rules.”

The proposal, still at an early stage, is already finding critics in the industry. "When the government invited people to invest in the state, it was a red-carpet treatment. Now, for some political reasons, it wants to appease a group or a community, it can’t change the policy. The new idea will have a more damaging impact particularly on the foreign investment in the state,” the chief executive of an infrastructure major said.
The Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci), which has a majority of its members from the small and medium sector, too is not willing to buy the policy. "Before taking any such drastic decision, the government should consult the industry. When we are talking about a competitive world, we should tie down those in the race. Private sector will find it difficult in many ways,” Fapcci’s president Atluri Subba Rao said.
But, some sections of the industry like the idea of an option on offering quota for claiming subsidies. "If the policy confines itself to linking reservations and subsidies, there should be no problem. Only those claiming subsidies will pay back by offering reservations. Even this should not become a norm down the line,” Narender Surana, managing director of Bhagyanagar India, said.
Analysts do not see any similarity between UP and AP for implementing the policy. "Our (AP’s) situation in industrialisation is different from that of UP. Our state is competing more aggressively whether it is for automobile units or semiconductor fabs. In this situation, a policy on reservations will send wrong signals to the investors,” a CEO warned.

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