Haryana Governor Satyadeo Narain Arya’s assent to a law regulating private sector hiring portends a potentially perilous slide in India’s investment climate and its socio-economic framework. The Haryana State Employment of Local Candidates Act of 2020 seeks to ensure that 75% of all jobs with gross monthly salaries of up to ₹50,000 are provided to the State’s own residents. The clamour for preserving economic activity for ‘sons of the soil’ is a recurrent theme now — Andhra Pradesh (AP) had passed a similar law in 2019, and the Madhya Pradesh CM has promised one to reserve 70% private sector jobs. Haryana’s law could face legal challenges like AP’s did, as it ostensibly flies in the face of the Constitution, especially Article 19(1)(g) and Article 16(2). Operationally, the law imposes onerous and contentious responsibilities on key personnel of firms in the State, including those with as few as 10 employees. There are three critical action points for businesses, attached to severe monetary penalties for perceived non-compliance. They need to register every employee earning ₹50,000 on an official portal and employing 75% of locals in such jobs (presumably by removing existing non-Haryanvi employees beyond the 25% limit). Most preposterous is seeking exemptions to the law — firms can hire outsiders by proving that local candidates for a desired skill are not available.
Apart from the power to enter firms’ premises for inspections, officials will decide if a firm can hire an outsider or should train local candidates instead, till they become proficient enough. Even if this harks back to an ‘Inspector Raj’ system, the process would dissuade employers from operating in the State, thus defeating the idea of boosting local jobs when unemployment is running high. But this is not just about ‘Happening Haryana’ becoming a difficult place to do business. A single disruption in the Gurgaon back office operations of a global firm or the supplies of auto components, on account of the new law, would be damaging to India’s already fragile reputation as a stable, trustworthy investment destination with a talented workforce. A possible investor exodus aside, this runs counter to the Prime Minister’s ‘Ek Bharat Shreshtha Bharat’ and ‘One Nation One Market’ slogans. Rising unemployment could spur more States to follow suit, and the logic could be extended to internal capital flows next. Bihar CM Nitish Kumar has already pointed out that Bihar’s deposits into the banking system are not matched by credit disbursals into the State. It is time the Centre dissuades such legislation which threatens to not only unleash a sort of ‘work visa’ regime for Indians within the country but also damage crucial workplace diversity. Immobilising a much-vaunted young workforce and rupturing the social fabric with this push for insularity would be the start of an unstoppable slide.
