The Times of India: Efficiency cannot be placed above equity
FRIDAY, APRIL 02, 2004 COUNTERVIEW

The case against reservations in the private sector does not stand up to scrutiny as it is based on a priori notions decontextualised from social reality. One such unquestioned virtue is 'efficiency', or the pursuit of profit through optimal utilisation of resources, both material and human.

Human resources are considered to be most efficient when, in the employer's perception, they possess the qualifications to perform the specific tasks assigned to them. It is, however, far from realistic to assume that the 'best' persons are employed, since all forms of recruitment, public or private, suffer from arbitrariness and subjectivity.

'Merit' and 'efficiency' are given the go-by even in the private sector, more so in large organisations where self-serving bureaucracies pursuing goals other than profit maximisation run the show. Economists such as Joseph Schumpeter, William Baumol and J K Galbraith have pointed to the role of the faceless technocracy in these organisations. Therefore, efficiency would not be compromised if reservations were introduced to address social concerns.

A moot point is whether efficiency should be pursued at the expense of equity in a poor, labour-abundant country such as ours. Efficiency is a concept that derives from labour-scarce economies which need to focus on improving the productivity of each individual. In India , pure efficiency would leave out of the economy and market a sea of individuals, thereby not only creating social schisms but also reducing the size of the market. The deepening of the market as opposed to its widening may not yield quite the same results for the entrepreneurial class, because satiated people consume less.

Therefore, a broader market comprising diverse cultures will recompense what is arguably lost by way of merit or efficiency. Corporates in the US pursue affirmative action more out of enlightened self-interest than altruism. Finally, private capital cannot be isolated from the public, just as the private sphere of the individual cannot be delinked from her social existence. The pursuit of a reservations-free domain seems just as illusory as that of a free market.