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This article is written by Somya Janki from Kalinga Institute of Industrial Technology. This is an exhaustive article that discusses domicile reservations in the private sector along with its capacity to curb unemployment.


It was on the 5th of November of 2020, the state of Haryana under Manohar Lal Khattar government passed the Haryana State Employment of Local Candidates Bill. Then on 26th February 2021 it came into news that Governor Satyadeo Narayan Arya gave his assent to the bill thereby making it an act. This year in the first half itself i.e. March 2021 saw another bill introduced by the Hemant Soren government, Jharkhand State Employment of Local Candidates Bill which had a resemblance to the one introduced in Haryana too which piques our interest that why are the states introducing these employment bills. So, let’s delve deeper into our subject.

Amid the pandemic era and lockdown, many Indian states have been facing economic slowdown including a rise in the rates of unemployment. To deal with this quandary many states have resolved to different methods. A few months back the state of Haryana passed a bill regarding 75% job reservation to the natives of the state in the private sector which became a debatable topic. But it is to be taken into account that Haryana was not the first state where such a type of reservation policy was introduced. Even before it states like that of Andhra Pradesh, Madhya Pradesh and Karnataka too introduced it. But here a million dollar question arises whether these incentives taken by the government are right? Is it legally correct? But before pondering upon these points we need to get acquainted with the provisions pertinent to the reservation policy.

Job reservation for domicile

Vocal for Local

Our nation is one of the largest developing economies in the world but there is something paradoxical about our growth. Even though we were experiencing progress the unemployment was still surging owing to the very fact that the country was experiencing jobless growth, that is the number of job creation was not in tandem with the growth. So at that time states like Andhra Pradesh introduced the job reservation policy under which 75% of the jobs would be reserved for the indigenous population of the state. Now in recent times, the economy is in a state of havoc due to which many have lost their jobs. To curb it, states like Haryana and Jharkhand came up with a 75% reservation policy in the private sector for locals for jobs with salaries not more than INR 50,000 and INR 30,000 respectively. However, it would not apply to the public sector jobs or the jobs generated by the central or the state government.

States where previous attempts to enact such laws were made

In the past too this reservation policy was debated over by several political parties in various states like in the Indian state of Maharashtra it came to light from 1968 onwards and once again in the year 2008 while in Himachal Pradesh it was mooted over in the year 2004 and in Karnataka too it came into limelight in the years 2014, 2016 and 2019 and Andhra Pradesh too had a chance in 2019 along with Madhya Pradesh in the same year. In the most recent times, Andhra Pradesh proposed about 75% reservation in the private sector but it is still in the process of its implementation being challenged in the court. While the Madhya Pradesh government made it a mandate for 70% reservation in the private sector, it was not wholly implemented. Further in Karnataka, 70% reservation is aimed towards 2025, and certainly for Group C and D leveled employees reservation is aimed for 100%. However, they never had a chance to face the reality as it was quite conspicuous that the industrial sector was quite reluctant upon its implementation.

Legal provisions related to the reservation

Yet all does not end well with local reservation in the private sector carrying loopholes. These provisional bills have fair enough contradiction with the fundamental rights enshrined within our Indian constitution such as:-

Right to equality 

Under Article 14 of The Constitution of India every person is equal before the law irrespective of the place of his birth. Article 15 prohibits any kind of discrimination based on place of birth and fairly noted this article only allows positive discrimination that too for the unprivileged or the backward strata of the society and specifically Article 16 of the Indian constitution goes on to states that no discrimination on the place of birth should be made in the matters of public employment. And as the fact is there although domicile reservation could be made but this power is solely conferred upon the parliament but not bestowed upon the state legislature.

However, Article 371 of the Constitution of India also gives special protection to few states, for instance in the case of the state of Andhra Pradesh which has power bestowed to directly recruit local cadres in certain areas or fields. 

Right to freedom

As guaranteed by Article 19 of the Indian constitution that any citizen of India can move freely throughout the territory of India unless contrary to it there are reasonable restrictions. It also gives freedom to practice or carries out any profession.

Benefits of laws reserving jobs for locals

Curb unemployment

As suggested by the bill itself the ultimate rationale behind introducing it was to curb unemployment. This bill would curb the unemployment rate within the states where these policies are to be implemented by providing much of the population with jobs.

Raise the morale

With the presence of a higher employment level it would also level up the morale of the citizens and especially it would boost up the youths who are left unemployed without such incentives.

Getting through the debacle

At present when the nation is overall facing turmoil these provisions would be able to get through the setbacks as that of the recent stagflation situation and it will also bring the development back to its pace and level up the infrastructure.

Agrarian crisis

Many people do want to get hold of jobs instead of practicing farming but due to the dearth of jobs in the private sector, they are not able to do so. This policy would help it out by supporting domicile reservations.


Migration is becoming a major concern especially inter-state migration and somehow it has also contributed a lot to the surge in the slum population.

Liberalization, Privatization, and Globalization reforms

Soon after the Liberalization, Privatization, and Globalization reforms the country faced a crisis in the job market with a plethora of jobs in the hands of foreigners. So, these reservations are somehow giving the reins to the government sector to secure jobs for the natives.

Avoidance of corporate biasness- There are many instances where it was found that there were inherent biases among the corporate sector against minorities and Dalits and this will ensure that no such prejudice would be made.

Observation of the judiciary

Indira Sawhney case

Facts of the case

During that time, the Congress Party was headed by Prime Minister P. V. Narsimha Rao and the government came up with some modifications in the reservation scheme which would raise the reservation of economically backward classes by 10% thereby becoming 37%. In the year 1992, a journalist called Indra Sawhney came across young student protestors and a few days later she filed a case against the union of India regarding the implementation of reservation policy. Finally, the judgment was decided in the ratio of 6:3 by a nine judge bench.

Issues of the Case

The case had the following issues or concerns:

1) Extension of reservation for a certain community is an infringement of the right to equal opportunity

2) Caste cannot be the basis of backwardness through economic criterion

3) The efficiency of public institutions was put at risk.

It had further core issues to dealt with:

1) Whether Article 16(4) was an exception to Article 16(1) or is it exhaustive in itself of the rights of the reservation.

2) Does Article 16(4) allow the classification of the ‘Backward Classes’ into the backward classes and most backward ones, and is it considered at the economic level?

Ratio Decidendi

1) The Backward class of citizens in Article 16(4) can be recognized with both the caste system as well as on an economic basis.

2) Article 16(4) allows further classification of backward classes into unprivileged groups and extremely poverty-stricken

3) There shall not be any reservation in promotion.

4) Article 16(4) is not an exception under Article 16(1) but rather an instance of classification. Reservation can be made under Article 16(4).

5) Backward classes in Article 16(4) were not similar to those in Article 15(4) that are socially and educationally backward.

6) Reservation shall not exceed above 50%.

7) Creamy layers should be excluded from the backward strata.

Nagaraj case

Facts of the case 

During the 1950s states were giving much reservation to SCs and STs as they were not adequately represented in matters of public service. But in the case of Indra Sawhney V/S Union of India, it was held unconstitutional so reservation could only be made during the time of recruitment but not after it. Then the parliament enacted the 77th Amendment thereby introducing article 16(4) of the Constitution of India favoring reservation in promotion on fulfillment of the following prerequisites :

  • The SC/ST community should be socially or educationally backward.
  • The SC/ST communities are not adequately represented in matters of public employment.
  • Such a reservation policy should not affect the overall efficiency of the administration.

Ratio Decidendi

1)“Creamy layer” principle applies to OBCs only; it may be applied to SCs/ Sts to deny reservation.

2)Proof of Backwardness of SC/STs- The Supreme Court held the conclusion in the Nagaraj case that the State has to collect quantifiable data showing backwardness of the SCs and the STs as invalid which was just contrary to the finding arrived at by the nine-judge bench in Indra Sawhney v. Union of India and the social and economic backwardness cannot be applied to backward classes.

3)The test of proportionality to the population which is a mandate for the houses of parliament shall not apply to the reservation in promotions i.e. Article 16(4A) of the Indian Constitution.

Is it a bad idea?

Inconsistency with the Constitution of India

The ultimate point of the failure of these upcoming policies is that it is certainly not in compliance with the fundamental rights enshrined within the Constitution of India. It would breach Article 14 which guarantees Equality before the law regardless of the place of birth, Article 15 which prohibits discrimination on the grounds of place of birth, and further Article 16 prohibits biasness in the matters of public employment based on place of birth. It also infringes the freedom of movement within the territory of India and to carry out any business or profession regardless of the place of birth.

Strangulation of the private sector 

During the 1990s the government had introduced Liberalization, Privatization and Globalization reforms or LPG reforms clearly to increase the efficiency, growth, productivity, and competitiveness of the industrial sector but if these reforms are implemented the industrial sector will lose the very purpose for which it was privatized.

Drop in investment

It is well evident investors whether foreign or domestic do want to invest for seeking profit if there are reserved jobs particularly the industrial sector will not only lose its significance but also retard the growth of it create a sort of unease in the business sector.

Promotion of communalism

This will also lead gradually to regionalism thereby becoming a barrier to the unity of the nation.

Economic setbacks 

It will bring major crises along with it like paucity of the labor force, worsening of regional inequality, and endless problems which would rather than alleviating the problem add up to it.

How unemployment rate can be brought down without implementing such laws

Pro-market V/S Pro-business 

Government should speed up with the policies of Vocal for locals but it is to be stressed on promotion of increasing exports with the rest of the world this will not only raise government revenue but also provide a source for more job allocation.

Focus on Human development 

The government should focus on training the labor force rather than converting the private sector into a public one partly. It should focus on education programs and train the labor and also pose restrictions on the contract by the industrial sector which pose a “hire and fire” basis and promote long-term contracts.

Stimulus packages

Government needs to provide an injection to the economy or provide fiscal stimulus which would help to pair up with much of the solution to the crisis the economy is facing.


From the whole analysis, it is very evident that the government is certainly lacking in practicality. Even though there are local reservations in the private sector it would be plausible for a certain time frame only but it would not be an answer to long-term goals but it would add up to more problems. If it is implemented on a long term basis it will not be an eyesore just for the economy but a plethora of things like if a certain want to implement these policies certainly other states would also start adopting it which will bring innumerable economic problems and harm to the nation’s integrity which should not be the case. So, the government should take incentives with a clear picture. Although domicile reservation may work out for short-term goals for the future ahead, it needs to put much more effort into the prosperity of the nation.


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