The 14-month-old Congress government in Karnataka, which is battling two major scams — embezzlement of funds from the Scheduled Tribes Development Corporation with the concerned minister behind bars and nepotism in the allotment of sites to Chief Minister Siddaramaiah's wife — is now embroiled in another controversy. In its zeal to reiterate the 'Kannada identity', Karnataka's cabinet approved a Bill that mandated 50 percent reservation in jobs at the administrative level and 75 percent at the non-administrative level for Kannadigas in private industries and other private organisations in the state.
Within 24 hours of the cabinet's nod on 15 July to the Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024, the government put it on hold following a backlash from the private sector. Noted private sector stakeholders described the proposed Bill as "regressive, discriminatory and unconstitutional."
In a damage control exercise, the chief minister on 16 July put the legislation on hold and posted on X, "The draft bill intended to provide reservations for Kannadigas in private sector companies, industries, and enterprises is still in the preparation stage. A comprehensive discussion will be held in the next cabinet meeting to make a final decision."
While the move has managed to muzzle the Bharatiya Janata Party (BJP) and Janata Dal's (Secular) plans to put the government on the mat in the ongoing legislature session, many Congressmen are embarrassed and unhappy with the developments. "This was not the right time to bring forth such legislation. The only motive would be to divert attention from other controversial issues for which the government is facing flak," a senior Congress leader told me.
Another Congress functionary said that his government lacked PR skills, which was one of the reasons that the five guarantees of the party that propelled it to power in the 2023 Assembly polls did not work in the Lok Sabha elections. "If Siddaramaiah was going to put the legislation on hold for 'wider consultations,' what was discussed in the cabinet then? What were the Industries Minister MB Patil and Information Technology Minister Priyank Kharge doing in the meeting, who rushed to defend it after the backlash? Was the Bill vetted by the law department to understand whether it will stand judicial scrutiny before being brought to the cabinet," the functionary questioned.
Labour minister Santosh S Lad, who will be piloting the bill in both Houses of the Karnataka Legislature once tabled, said that the Congress manifesto in the 2023 Assembly polls had assured 80 percent of jobs to Kannadigas in the private sector. "People have not read the entire provisions in the proposed Bill and are jumping to conclusions. With some noted personalities dubbing the bill as regressive, it has taken a nationalism angle. I will not comment further and stand by what the chief minister has said in his tweet," Lad added.
MB Patil assured industry leaders that the bill is "withheld until further consultations and due diligence," asking them not to panic, while Priyank Kharge reiterated wider consultations before the it is passed.
The immediate impact of the now deferred legislation came from Karnataka's neighbours Andhra Pradesh and Kerala.
The IT, Electronics and Human Resource Development Minister of Andhra Pradesh Nara Lokesh extended an open invitation to NASSCOM members to invest in his state. "We understand your disappointment. We welcome you to expand or relocate your businesses to our IT, IT services, AI and data centre cluster at Vizag," Lokesh said on X. Kerala Minister for Law, Industries and Coir PR Rajeev said, "Employee talent and merit are the only criteria for recruitment."
Will Brand Bengaluru Take a Beating?
After two decades, a move to brand Bengaluru had been initiated with Deputy Chief Minister DK Shivakumar, who is in charge of the city, to rehaul its infrastructure. In June, he had indicated reviving the Bengaluru Agenda Task Force (BATF), an initiative of former Chief Minister SM Krishna, who is considered the father of Brand Bengaluru.
Business and Brand Strategy specialist Harish Bijoor said, "It rattles the thoughts of Bengaluru people, who have existing businesses here and would be wondering what is coming next. Fundamentally, massive investors are always concerned about their existing employees rather than future employees. When decisions such as these are announced, most of the time the fine print is not read and only what is thrown up as headlines are read."
Bijoor added that it shakes up the sentiments of the existing players in the markets. "New investors, who do want to invest in Bengaluru, seek clarity. Fortunately, the CM has said it is not going to be implemented right away. It has given a positive impression that we have a government that listens to industry. But there was no point in creating a bit of a tumult in the industry and pulling back," he stated.
A R Ramesh, CEO of TeamLease said, "Implementing such reservations may adversely affect the state's productivity and the attractiveness of its capital, ultimately impacting its GDP and per capita Net State Domestic Product, where it currently holds the 4th position. As the epicentre of India's IT revolution, Karnataka risks unsettling national and international tech giants that rely on a skilled workforce."
Siddaramaiah's Penchant for Kannada identity
“I am a Kannadiga first and then an Indian,” Siddaramaiah had said at the 62nd Karnataka Rajyotsava (state festival) celebrations in November 2017.
Siddaramaiah, who made his debut in the Assembly in 1983, headed the Kannada Kavalu Samithi (Kannada Watchdog Committee) to oversee the implementation of Kannada in the administration. In July 2017, during his first term as CM, he had appointed a nine-member panel to design a state flag as an identity symbol for the state.
On the proposed bill, Siddaramaiah said on X: “It is our government’s wish that the Kannadigas should avoid being deprived of jobs in the land of Kannada and be given an opportunity to build a comfortable life in the motherland. We are a pro-Kannada government. Our priority is to look after the welfare of the Kannadigas.”
Similar Reservation Bills Junked by Courts
Similar reservation bills have been previously junked by courts. Before Karnataka, it was Andhra Pradesh in 2019, Haryana in 2020, and Jharkhand in 2023 that tried to implement reservations for locals in private jobs. All three states provided for the quotas with salary caps.
The Andhra Pradesh bill mandated reservations up to 75 percent for jobs with a monthly salary of Rs 30,000. The Andhra Pradesh High Court held the bill “may be unconstitutional.'' The Haryana government passed a bill that reserved 75 percent of jobs paying up to Rs 30,000 a month in the private sector.
The Haryana and Punjab High Court said the state “cannot as such discriminate against individuals on account of the fact that they do not belong to a certain state.'' The Haryana government has challenged the high court's decision in the Supreme Court. Hemant Soren’s Jharkhand government passed the Domicile Bill, paving the way for 100 percent reservation for locals in Class-III and Class-IV state government jobs in December 2023. The governor vetoed the bill.
This is not the first time the Congress government has scored a self-goal on something like this. In February this year, Kannada and Culture Minister Shivaraj S Tangadagi told the legislature that the government was considering making all multinational companies publicly display the number of Kannadigas employed in their offices and a failure to comply could result in the revocation of permissions granted to these companies.
His statements sparked controversy — industry bodies and opposition leaders called it a government overreach that would hurt the image of India’s IT capital. Shivakumar, the Deputy Chief Minister of Karnataka, also objected to Shivaraj’s idea, saying it was “impossible” to implement.
(Naheed Ataulla is a senior political journalist based in Bengaluru. This is an opinion article and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)
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