In simple words, reservation refers to the act of withholding seats or spaces for the general
elevation of status and living standards for socially and educationally deprived sections, classes
or groups. This approach is very specific to the democratic process in India, where the whole
country was divided by "casteism," a social structure that split society into different sections
based on caste and social standards in society. Casteism was practiced for centuries before
independence and had its roots deep into the culture of India, particularly Hinduism. After
independence, the aim of the new constitution was to bring its citizens together under the sense
of “national integration” and so the policy of reservation was introduced into the parliament.
Initially, these privileges were only given to the scheduled castes (SCs) and scheduled tribes
(STs), but later in 1978, these privileges were extended to the other backward classes (OBCs), on
the recommendations by the “Mandal Commission.” Since then, reservation has helped the
socially and educationally backward sections to gain equal recognition and participation in all
aspects of the society. But, in recent decade, the ‘social evil’ due to reservations seem to
outweigh its benefits altogether. Thus, it is imperative to understand its negative toll on the
economy and the society in general. A simple cost benefit analysis would help in providing
valuable insights to analyze the effectiveness of this policy and its impact on the society, both
socially and economically.
The most primitive structural fault in the system of reservation is that, it is a caste- based
reservation system that means in order to avail its privileges a person must simply, belong to a
class that the constitution recognizes as backward and under-privileged. This ignores the
possibility of the problem of “free- rider,” as people that are economically well-off yet, belong to
the said backward class take unfair advantage of the benefits. This concept of “creamy layer”
indicates that the benefits of the reservation system are stolen by the top creamy layer
(economically well- off) of the backward class, leaving the strongest among the weak take the
bigger chunk of the cake and leaving the weakest among the weak destitute. Thus, the
reservation system has in a way only ‘slowed down’ the rich from becoming richer and the poor
from becoming poorer. The current system of reservation entails 15% seats for the SCs, 7.5%
seats for the STs and 27% seats for OBCs and other minorities, thus forming a total
constitutional reservation percentage of 49.5%. Additionally, the rest of the 50.5% of the seats
are open to both the general and the backward classes. This highlights the problem of double
counting which in a way has targeted the general category adversely as their share of
representation maybe forced to less than half the total percentage. This critically affects the
“poor” amongst the general category while enrolling for educational, occupational and other
institutions in the country.
As witnessed in the past as well as recently, caste based reservation promotes subversion in the
society in terms of violent riots, protests, etc. leading to loss of property and riots. Not to
mention, only the recent, Jat reservation agitation of 2015, that left 10 dead, and several others
including security personnel injured. The indirect costs of the riots, mobile services suspended in
the Rohtak district, disruption in water supply to Delhi from Haryana Munak canal, suspension
of supply of basic commodities like milk, vegetables and LPG and also effect on the petrol prices
accounted for a huge economic loss. The monetary losses incurred due to the Jat agitation
include a total of Rs. 34,000 crore of economic activity, considering the rise in prices and
disruption of various public facilities. At Rs. 18,000 crore, the industry chamber tied the loss to
business activities like tourism services, transport services, mainly railways and highways, and
financial services. It estimated the loss of Rs. 12,000 crore for industrial and agricultural
business activities including manufacturing, power, construction, and damage to food items.
Infrastructure damage including damage to roads, restaurants, bus stands, railway stations,
among others, can result in Rs 4,000 crore, resulting in Rs 34,000 crore loss overall. For the
northern states like Haryana, Punjab, Delhi, Chandigarh, Rajasthan, Uttarakhand, Uttar Pradesh,
Jammu and Kashmir and Himachal Pradesh, the anticipated loss was estimated. All these states
contribute to India's Gross State Domestic Product (GSDP) by around 32 percent. These are the
huge economic damages incurred by such protests.
Moreover, this policy is inappropriately used as a ‘political gimmick’ by politicians to lure large
number of citizens belonging to the backward classes to cast their votes in favor of their
candidate. Therefore instead of using the policy for the welfare of the society, it has become a
tool for the politicians to wrongly assert their power and manipulate the masses. The policy also
ignores meritocracy as with certain percentage of seats reserved, there is less room for merit. As,
people belonging to the backward classes have the incentive to not work as hard or gain proper
education as others since, they are guaranteed their share of privileges in the selection process
irrespective of their qualifications or worthiness. This situation takes a negative toll on the
economy as the productivity in terms of workforce and output never reaches its maximum
potential due to loopholes in the system. Therefore, caste based reservation is anti-progressive
and hinders the economic growth because it does not reward merit or efficiency.
There is no doubt that the reservation did indeed benefit the underprivileged in gaining equal
rights and status as the others, since independence. During the early years of reservation, it was
noticed that there was a considerable increase in representation from different sections of the
society. It also helped people from backward sections to achieve higher posts or services in the
public sector as well as in some private institutes. Seats are reserved in Lok Sabha for SC, ST
gave the minorities and the underprivileged a platform to voice their opinions and have their
problems heard. But, in the current scenario these benefits seem redundant; instead the society is
now bearing deeper costs by keeping up with the reservation system.
Ironically, the mere existence of a caste based reservation system further perpetuates the
casteism in the society rather than eliminating it. The said costs overweigh the benefits of the
reservation system and it is seen that the society is operating at a net loss, with no overall welfare
whatsoever. In such a situation, incorporating new solutions to cover the loopholes in policy,
would help redefine over all welfare to the society. The adoption of income based reservation
system would be more beneficial to the society given the current scenario. Moreover, the
problem of double counting must be eliminated, that means, people that have already availed the
benefits of reservation in the past must not be considered eligible for future instances, as this
would allow a scope for meritocracy and efficiency that would greatly uplift the functioning of
the society and the economy.