Explained: The Karnataka Quota Bill And Criticism Surrounding It

The Karnataka government's quota bill, which aimed to reserve a significant portion of jobs in the private sector for locals, has courted widespread criticism from people and industry stakeholders alike. The Siddaramaiah-led government has now put the bill on hold. 

What is the bill?

The 'Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024' aims to reserve 50 per cent of jobs at the management level and  70 per cent of jobs at the non-management level for local candidates.

State industries minister M B Patil stated that the proposed policy aimed to protect the "interests of Kannadigas", while also considering the interests of industries. IT minister Priyank Kharge said that the bill is intended to ensure more jobs for locals.

Why the bill is being opposed

The bill, intended to promote employment opportunities for locals in Karnataka, has faced criticism from industry stakeholders and experts. They argue the proposed law may be unconstitutional and harmful to the state's economy.

One of the primary concerns is that the bill could lead to a scarcity of skilled talent in the state. Companies may struggle to find local candidates with the required skills, which may hinder their operations and growth.

The bill, many say, violates the fundamental right to equality and discriminates against non-locals. This could lead to legal challenges and create an uncertain business environment. 

The bill could also hurt the state's economy as companies may be forced to relocate to other states or countries where they can find the necessary talent. This could lead to a loss of investment, jobs, and revenue for Karnataka.

Additionally, the bill could lead to a brain drain, as talented individuals from other states may choose not to work in Karnataka due to the restrictions. This could deprive the state of the skills and expertise it needs to grow and develop.

The bill could particularly affect startups and IT companies, which often rely on skilled talent from across the country. These companies may find it challenging to operate in Karnataka if they are restricted from hiring the best talent available.

What industry stakeholders said

TV Mohandas Pai, former CFO of Infosys and current partner at Arin Capital, has called the bill "regressive, unnecessary, draconian, unconstitutional, and illegal".  

Kiran Mazumdar-Shaw, Chairperson of Biocon, has expressed concerns the bill could hurt the state's leading position as a tech hub and affect the availability of skilled talent.

Co-founder and CEO of PhonePe, has criticised the bill, saying despite creating employment opportunities for over 25,000 people, the bill could bar his children from employment in Karnataka.

The industry body NASSCOM has sought the withdrawal of the bill, stating that the restrictions could drive startups and IT companies out of the state.

Anuj Srivastava, founder of GenAI startup OnFinance, has expressed concerns that the bill would create a major "people" problem for his company.

Chief Minister Siddaramaiah initially announced the bill on social media but deleted the post after facing backlash. The government has now put the bill on hold and will conduct further discussions before making a final decision.

The Chief Minister later clarified that the draft reservation bill was still in its "preparatory stage" and would be subject to comprehensive discussion during the next cabinet meeting before a final decision is made.