When AP put the cart before the horse
Mains Paper 3: Economy
Prelims level: Article 19
Mains level: Job localization law
- Raises concern the latest and the most serious being the law passed by
the Andhra Pradesh government to reserve 75 per cent of jobs in an
enterprise to locals.
- The trigger for this politically rewarding but otherwise a debilitating
move is an economy which is witnessing a ‘job-less’ growth, coupled with an
agricultural sector that is in deep distress.
- The sight of people from other States ‘taking away’ their jobs has
caused heartburns among a section of the society that has felt left out.
- The Andhra Pradesh Employment of Local Candidates in the
Industries/Factories Act 2019 insists that every enterprise, new and
existing, should reserve 75 per cent of jobs for locals. Existing industries
have three years to comply with the law.
- If the businesses do not find qualified people for employment, they
should train them in that time. For that purpose, the State will set up
- Those not complying have been warned of penal action.
Why the law is bad?
- It is unconstitutional. Article 19 of the Indian Constitution guarantees
free movement. An Indian can work and live in any part of the country.
- It also ignores a Supreme Court order which caps reservation to a
maximum of 50 per cent. That apart, the policy is not borne out by facts.
- The census data on migration paints a different picture. While the stock
of inter-State migration between 2001 and 2011 has risen from 41 million to
54 million, as a share of the total population, it has remained at 4 per
- In fact, in majority of India’s districts, inter-State workers account
for less than 1 per cent of urban workers.
- Most migration, the data suggests, happens within a State. Thus, this
law serves little purpose.
- To passing a law that mandates employment of locals for all industries
will be counter-productive.
- Lack of qualified people appears to be the only answer.
- To compete in a highly competitive market such as India, you need to
produce a world-class product and that cannot be done without quality
- It is quite understandable that the newly carved out State of AP will
take some time to build the necessary infrastructure, skill its manpower and
build the supply chain that a highly industrialised environment demands.
- But in the absence of these, such protectionist policies will only leave
it industrially backward, as investors would prefer to invest elsewhere in
- Its leadership position at the top of the ‘Ease of Doing Business’
ranking in the country is already at stake.
Investments at stak
- Policymakers in AP are forgetting that there is intense competition
among the States in India to attract investment.
- Every State is offering incentives these days and what is tipping the
scale is quality of manpower.
- AP’s policymakers have a shining example in their own State – Sri City.
- This industrial township, spread over 100 square kilometres, has
investments from over 180 companies from across 27 countries.
- The brands here include the likes of Cadbury, Pepsi, Isuzu, Alstom and
- The question they should ask themselves is that would these investments
have come if the township was not located just 55 kilometres off Chennai,
with a bulk of the employees travelling from the city to work there.
- At a time when the world is moving towards Industry 4.0, where
technology plays a critical role, skilled manpower happens to be the key
- Such retrograde policies will only leave the State industrially backward
and widen the inequality when it comes to economic development.
- A better approach for the AP government would be to identify focus
sectors (based on the State’s inherent strengths) for investment, unveil
attractive sector-specific policies with incentives that will be too good
for investors to ignore and initiate a large-scale skilling programme in
consultation with the industry to skill the workers for employment in these
- Only such progressive measures will ensure that investors will flock the
State, employ the locals and catalyse its rapid economic development.
- As things stand now, none of these are likely to happen.
Q.1) Consider the following statements about Uchhatar Avishkar Yojana (UAY):
1. It was launched in 2015.
2. It has an objective to promote innovation of a higher order that directly
impacts the needs of the Industry.
3. UAY projects are funded jointly by Ministry of Skill Development and
Entrepreneurship and World Bank.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) 1 and 2 only
d) All the above
Correct Answer: C
Q.1) To what extent the recent ‘jobs for locals’ law affected the state risks
losing out on investments and remain industrially backward. Comment.