Karnataka govt should consider real solutions for job creation

The Karnataka government has done well to put on hold the legislation it proposed mandating quota for locals in the private sector. While the Siddaramaiah government’s prompt response to the outcry by the industry is admirable, the same cannot be said about the motivation that resulted in the crafting of the Bill in the first place. The Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024, proposed appointment of Kannadigas to 50 per cent of management positions and 75 per cent of non-management positions in the private sector.

Nasscom demanded itsforthwith withdrawal. Pointing out that the tech sector contributes 25 per cent to the state GDP, housed a quarter of the country’s digital talent, more than 11,000 startups, and 30 per cent of the total global capability centres (GCCs), the industry body rightly pointed out that the Bill threatened to reverse the progress, drive away companies and stifle startups, especially when more global firms, like GCCs, were looking to invest in the state.

A number of businesspersons, including Biocon chairperson Kiran Mazumdar-Shaw, former Infosys CFO T.V. Mohandas Pai and Swarna group managing director V.S.V. Prasad, also opposed the proposed legislation. It is astonishing to see that the government of a state that is a leader in the tech industry is so disconnected with the concerns of local businesses. It seems unlikely that any industrial association was consulted while the Bill was conceived and drafted. A cynical observation could be that the politicians running the state knew about the backlash that would follow the announcement, giving them the excuse to roll back the announcement (which they never intended to execute).

This would placate the Kannadiga champions, without hurting the industry. Be that as it may, the incident doesn’t cover the state government in glory. In fact, such announcements (and often actions) dampen the enthusiasm of prospective investors, who are haunted by fears of such measures being introduced later. Such populist moves hurt the prospects of not just one state but the entire country. After all, son-of-the-soil activists thrive in all other states, as well. A similar law by the BJP-led state government introduced reservation for locals in Haryana—75 per cent reservation for locals in jobs with a monthly salary of below Rs. 30,000.

Thankfully, the provision was struck down by the Punjab and Haryana High Court last November. The state government’s concern for more jobs for locals is understandable but the solution should not be worse than the problem itself. It needs to engage all stakeholders, including local communities, businesses and social groups in a meaningful dialogue to evolve a sustainable solution. Famed for its IT sector, Karnataka, like any other state, can be developed as an attractive destination for investment, both domestic and foreign.

It needs to excel in other sectors as well—tourism, for instance. Chief Minister Siddaramaiah recently expressed displeasure over inadequate facilities to promote tourism in the state, especially in the coastal region, despite the state having a 320-km coastline. A decision has been made to formulate a new tourism policy, he said. Such decisions—rather than crude populist moves like quotas for locals— will boost economic growth and generate employment.