Nativist Job Quotas | Andhra Pradesh

In a first for the country, Andhra Pradesh chief minister Y.S. Jagan Mohan Reddy has mandated that 75 per cent of all jobs in the state should be reserved for locals. On July 24, the state assembly passed the Andhra Pradesh Employment of Local Candidates in Industries and Factories Bill, 2019, making this mandatory for all public-private industries, factories, joint ventures and projects in the state. Existing firms have three years to implement this decision; however, companies listed in the first schedule of the Factories Act-including those in hazardous industries like fertiliser, coal, pharmaceuticals, petroleum and cement-are likely to be exempted, clarified a state official.

While the decision is in keeping with the chief minister's pre-poll promise to improve employment opportunities for the state's youth, the new law has kicked up a row among industrial leaders, who allege it will restrict growth prospects. They say the populist decision will dampen the enthusiasm of investors, who are already wary about starting enterprises in a cash-strapped state. They argue that no enterprise can flourish without competent talent, and that packing industries with locals is suicidal.

However, Jagan has dismissed the criticism as vested interests indulging in false propaganda. But even those welcoming the decision have concerns. "There are certain sectors in which it is difficult to find [qualified] locals," says G. Sambasiva Rao, president, Federation of Andhra Pradesh Chambers of Commerce and Industry. "Of course, if skilled manpower is available, the industry would prefer to hire locals," says K.V.V. Raju, chairman of the Visakhapatnam chapter of the Confederation of Indian Industry. "However, in sectors like IT and emerging technologies such as artificial intelligence and blockchain, non-availability of [qualified] locals will pose a challenge."

Others caution that post the bifurcation in 2014, the truncated Andhra Pradesh is in dire need of investment, and that laying such pre-conditions is a risky move. At a time when jobs are in short supply, the government's decision could make matters worse, especially if other states follow suit. There is already a clamour for such a law in Maharashtra, Gujarat and Karnataka. On July 9, Madhya Pradesh chief minister Kamal Nath said he would bring in a law to reserve 70 per cent of jobs for locals. While such laws do promote local hiring, state governments will also have to focus on skill development of locals to ensure employability.

Jagan says he is working on this too. The state government will invest in skill development and work with industries to train young people in the required skills. To this end, a skill-development centre will be set up at an engineering college in every parliamentary constituency to offer training and education for the skills required by industries in the constituency.

Industrial leaders and potential investors, though, are not too impressed by the plan. The jobs-for-locals move comes on top of the uncertainty raised by Jagan's decision to review contracts approved under the previous TDP government, including power purchase agreements. Some industries in the southern parts of the state are already considering the possibility of relocating to Tamil Nadu. Andhra Pradesh, already starved of investment and development opportunities, could end up losing more than it gains.