Needed: A social sector regulator

Indian industry is now casting around for ways to creatively skirt the private sector job quotas that seem inevitable from a government that is rapidly regressing to the economic thinking of the seventies.

But the solutions they are considering might be as self-defeating as the government's official policy. Voluntary caste-based hiring, as they are reportedly considering, may well work to assuage the government's new-found zeal to help India's backward castes.

But just as quotas have patently done little to help the people for whom they are intended, corporate India's solution is unlikely to make a huge difference, either. The problem is that both suffer the same vice of insincerity and opportunism.

To be fair, industry leaders are well aware of the drawbacks of this solution and are exploring other options. Ficci President Saroj Poddar has correctly pointed out that such a move will only stoke casteism in the private sector.

The government, he and other senior executives have said, must focus on "capacity building" and "working from the grassroots". Of course, they are right, given that industry surveys have shown that over half the quotas in institutions of higher learning go unused because the target group for which they are intended lacks the wherewithal to take full advantage of them. There is little point in reserving jobs for backward caste people who lack basic education.

Nevertheless, it would be realistic for business to look at durable and workable solutions, because the strengthening impulse of casteist politics suggests that the issue is clearly not going away anytime soon.

For the private sector, this problem could well be an opportunity. Not, it should be clarified, to raise the level of activity in publicised "corporate social responsibility" programmes that achieve little beyond displaying token philanthropy, but in ways that could prove mutually beneficial. In fact, this could be a good chance for the private sector to broadbase the issue out of the caste-ist mould and set the development agenda to its own advantage.

This is not a question of high-minded altruism but practical business since it is private trade and industry that stands to gain the most from doing business in a country whose population is well educated and healthy.

The conventional view about emerging market economies is that governments should vacate commercial activity and focus on developing and strengthening human capital, by increasing spending on public health and education.

Indeed, the tiger economies of South-east Asia have powerfully demonstrated the virtues of this route. Today, the fact that India's human development indicators are only a little above those of sub-Saharan Africa suggests that the government has a huge challenge on its hands, something that the UPA's common minimum programme acknowledges, albeit in a confused manner.

It is such visible deficiencies that raise hostility, however, illogically, to liberalisation and globalisation. The "trickle-down effect," to use former Prime Minister P V Narasimha Rao's term, of reform has stopped short at India's middle class.

It could, of course, be argued that these problems are not of the private sector's making. But it is equally true that industry can never be isolated from the social milieu in which it operates.

So, instead of searching for partial stop-gap solutions to an enduring problem, it might be to the private sector's advantage to suggest a kind of "social sector depreciation charge" in the form of compulsory financing of primary schools and health centres and hospitals in targeted areas.

This would differ from the current set-up in that these schools and hospitals could be administered by independent institutions, not associated charitable trusts, and audited and monitored by independent regulators.

Just as India has insurance and telecom regulators who have, warts and all, admittedly played a central role in facilitating the explosive growth in both the industries, it could be possible to have independent social sector regulators who monitor the quality of education and health delivery systems and work at the sorely needed "capacity building".

This model has the virtue of generating resources for social sector funding, which the finance minister is struggling to squeeze out of the tax-paying population, and giving the private sector a real vested interest in investing in human development.

Indian trade and industry has proved that is capable of being globally competitive. Now, it is time to demonstrate genuine good corporate citizenship and prove to the doubters that social justice can be embedded in market dynamics.