New Delhi: The National Democratic Alliance (NDA), led by the Bharatiya Janata Party (BJP) and the opposition grand alliance have been trading charges and counter-charges on reservations during the ongoing assembly election campaign in Bihar. First, the grand alliance of Congress, Janata Dal (United) or JD(U) and Rashtriya Janata Dal (RJD) attacked the NDA by evoking Rashtriya Swayamsevak Sangh (RSS) chief Mohan Bhagwat’s statement on the need to review reservations. RSS is the ideological parent of BJP. Then, Prime Minister Narendra Modi accused the grand alliance of conspiring to dilute existing reservations for (Hindu) Dalits and other backward castes (OBCs) by introducing reservations on religious grounds.

In an election, where caste versus development has been the running refrain, the debate over reservations can provide an insight into the fact that the two are actually interlinked, more so in Bihar.

Employment generation, especially of a better quality, is one of the most important challenges facing the Indian economy. According to the 2011 census, there were around 362.5 million main workers (those who worked for more than six months in the reference year) in India. The Reserve Bank of India (RBI) data shows that only 29.65 million people had jobs in the organised sector—public and private—in 2011-12. This means that only around one in every 12 Indian workers have fixed terms of employment.

Even this paltry share has an iniquitous distribution among caste groups. A National Sample Survey Office (NSSO) report for 2011-12 shows that OBCs, scheduled castes (SCs) and scheduled tribes (STs) have a much lower share of workers with regular wages in the country. The number of regular wage/salary earning workers per thousand workers was just 87 and 153 for workers from ST and SC communities, respectively. It is around 264 for other categories (excluding SCs, STs and OBCs). As Chart 1 shows, Bihar is worse off than the all-India average for all categories.

Also, the number of jobs in the public sector—where reservations are applicable—in India has been coming down in the overall organised sector employment since 1991. From the highest level of 19.56 million in 1996-97, it fell to 17.61 million in 2011-12. Bihar, however, has been an outlier, with its share of public sector in organised sector employment climbing. Around 93% of the organised sector employment in the state was in the public sector in 2010-11.

The reason for this divergence is not an absolute increase in public sector employment (it has actually gone down in recent years), but a complete collapse of organised employment in the private sector after the creation of Jharkhand. Only 26,000 people were employed in the private organised sector in Bihar in 2010-11. Chart 3 shows the state’s predicament—it ranks among the highest by share of public sector in organised employment and lowest in terms of share of private establishments in the organised sector. These findings are in line with the state’s low share in overall industrial employment, as was pointed out in a Plainfacts piece looking at manufacturing employment in the country.

Given the fact that quality private sector employment is virtually non-existent in the state, it is to be expected that any debate on reservations would have a more polarizing effect for both beneficiaries and non-beneficiaries than the rest of the country. As far as the question of why private sector employment has fared so badly in Bihar is concerned, it is unlikely that there can be a simple answer. It might be a result of the general tendency of private capital to flock towards already developed regions, or in the specific nature of construction-dominated revival of economic growth in Bihar—an argument which was made in a 2010 paper jointly authored by R. Nagaraj, professor at Indira Gandhi Institute of Development Research and researcher Andaleeb Rahman— in the recent period, which has generated growth but not created organized sector jobs.

Economics apart, the question is bound to have political implications. Bihar’s quest for a flourishing private sector might have been one reason why it voted overwhelmingly for Modi’s Gujarat model of development in the 2014 Lok Sabha elections. One would have to wait till 8 November to see whether the Patel agitation for reservations in Gujarat—allegedly rooted in lack of employment opportunities for one of the most important communities supporting the BJP—has taken away the sheen of Modi’s appeal. It is not without reason that JD(U) leader and Bihar chief minister Nitish Kumar declared support for Hardik Patel and his fellow travellers, days after they started their agitation.

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