Himachal Pradesh may lose investors, warn industry experts, urge CM not to raise job quota for locals to 80%

Shimla: With more states, Madhya Pradesh being the latest in the block, pitching for mandatory employment for locals, Himachal Pradesh, which had pioneered the move for 70 percent job quota in the industry, now wants it to raise it to 80 percent.

Faced with pressures from 9.80 lakh educated unemployed youths, registered in the state’s employment exchange, Chief Minister Jai Ram Thakur wants to impose a mandatory clause on the industry to employ a minimum 80 percent of bonafide Himachalis.

“This is a big necessity. I am thinking of taking up this critical issue at our upcoming global investors’ meet proposed for 11 and 12 June in Dharamshala. Currently, we are implementing a policy of 70 percent mandatory jobs for locals. This is insufficient if we look at the burgeoning figures of unemployed youths in the state,” he said.

But the proposed move seems to have already left the industry fuming at the time when there is a slowdown in the manufacturing sector, lay offs and shrinking job market. Only some months back, eight industrial units were closed down in Baddi-Brotiwala and Nalagarh (BBN) industrial belt where 1,760 persons also lost their jobs.

“The new condition is going to be a retrograde step, resulting in exploitation and aggression against the industry. It’s against the spirit of federalism, the right to establish a business, denial of equal opportunities and the right to hire manpower. It’s bound to breed inefficiencies and increase unionism,” says Arun Rawat, former chairman of Confederation of Indian Industry (CII) in Himachal.

The decision is likely to help the BJP government in Himachal Pradesh gain major political mileage, especially after having exploited the earlier Congress government’s failure to fulfil the promise of granting unemployment allowance to the youths. This is particularly significant in the state where most families (eligible employable persons) look for jobs in the government sector alone or patronage.

Himachal Pradesh witnessed a major boost in industrial investments after 2003 due to the central industrial package offering three-tier benefits to new industrial units set up in the state. The pharmaceutical industry, particularly, found Himachal’s key industrial belt of Baddi-Barotiwala and Nalagarh located next to Chandigarh, as its new hub. By 2010, the BBN was meeting 35 percent of Asia’s pharmaceutical demand. There were new job openings apart from economic benefits to the state.

“The central industrial package gave Himachal Pradesh the biggest advantage as huge investments came to the state. The mandatory clause of 70 percent jobs was a good facilitating factor to open up new employment opportunities for the locals, mainly unskilled and semi-skilled youths from far-flung and interior areas. The situation, however, has changed now,” recalls BS Nainta, a retired IAS officer who served as director of industries in Himachal Pradesh.

Currently, there are 48,455 industrial units in the state having an investment of Rs 32,246 crore; more than 75 percent of them were established after 2004-2005. There are 3,98,013 people in the industrial sector (excluding those employed in the hydro-power sector).

Data with the state’s Labour and Employment Department reveals that of total 1,260 industrial units, which were inspected, 1,170 had 70 percent people employed from amongst bonafide Himachalis, and only 98 units were found with less than 70 percent.

Many believe the figures given by the industries are not factual. The educated and skilled youths in Himachal Pradesh either prefer government jobs or move out to make their careers in MNCs, IT companies and also the corporate sector. The unskilled workforce in Himachal Pradesh too want jobs close to their homes, and never prefer to work in the industry. Others work for a few months and quit to go for easy options to work in private offices or business establishments in towns.

“The industry is often forced to hire/employ labour or workforce from Bihar, Uttar Pradesh, Jharkhand and few other states like Odisha and Chhattisgarh. The 70 percent figure is also not realistic. Even if it’s raised to 80 percent, it will not make any change or meet the employment needs of the locals. Use of aggressive or legislative measures on the industry will not work,” says GS Bali, a former Congress minister, who had led “rojgar” yatra for youths.

Though the Himachal Pradesh government, since the enforcement of the 70 percent clause in 2004-05, has neither prosecuted anyone for violations nor served legal notices, the provision definitely has given other states a chance to think of similar steps. Gujarat chief minister Vijay Rupani has spoken about raising job quota for locals to 80 percent while Madhya Pradesh chief minister Kamal Nath has proposed to link incentives for business with the condition of reserving 70 percent jobs for locals. States like Karnataka, Maharashtra, Telangana, and Assam already have such provisions.

But, Himachal Pradesh, which doesn’t have a well-developed infrastructure, lacks good road, railway and air connectivity, and has strict laws like Section 118 of HP Tenancy and Land Reforms Act making land transfers a big issue, will put itself to another disadvantage against bigger states as well as hill states like Uttrakhand. The latter is already ahead of Himachal Pradesh in hard-selling the state’s potential to investors.

“The Chief Minister of Himachal Pradesh must explore other viable job options for youths. The industrial units, which got lured by attractive incentives under the 10-year central package granted by then prime minister Atal Bihari Vajpayee have started migrating to other states. If you are going to impose tough conditions, the investors will turn away, or even close down their units,” says a professor of economics at Himachal Pradesh University, on the conditions anonymity.

Industrial exporters believe that with more states coming out with aggressive administration, policy or legislative moves on reservation of jobs for locals, there is going to be a negative environment and this will have long-term implications on industries. Once such measures are imposed it becomes a permanent reservation which no government dares to dilute it, politically.