< Daily Current Affairs & Important Editorials

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Reservation in private sector

GS- II >>Polity>> Reservation

Context: The Punjab and Haryana High Court invalidated the Haryana State Employment of Local Candidates Act, 2020, which guaranteed 75% reservation for locals in private sector jobs. The court ruled the law as unconstitutional and in violation of fundamental rights.

Overview of Haryana State Employment of Local Candidates Act:

• Enactment of the law (November 2020): Haryana passed the Haryana State Employment of Local Candidates Bill in 2020. Mandated employers to reserve 75% of jobs paying a monthly salary below ₹30,000 for local residents.
• Applicability of the law: Applies to all private entities, including companies, trusts, and limited liability partnerships. Covers any entity employing 10 or more persons for manufacturing or providing services.
• Definition of ‘Local Candidate’: Domiciled in Haryana for the past five years. Mandatory registration on a designated portal for availing benefits.
• Exemptions and penalties: Companies can seek exemption for not finding local candidates with desired skills. Violations result in fines ranging from ₹10,000 to ₹2 lakh.

Legal challenges of law:

• Basis of challenge: Industry associations challenged the law’s validity, citing violations of constitutional articles. Alleged infringement of Article 19 (freedom of residence and profession) and Article 14 (equality before the law).
• Contentions and defence: State argued the law aimed to protect the livelihood of domiciled people. Invoked Article 16(4) of the Constitution, empowering the State to create reservations for underrepresented classes.
• Similar laws in other states: Maharashtra, Karnataka, Andhra Pradesh, and Madhya Pradesh have enacted laws providing reservations in the private sector. Andhra Pradesh’s law faced constitutional challenges.

High Court’s ruling and reasons for quashing:

• Unconstitutionality and discrimination: Court declared the law unconstitutional, impairing the right to carry on an occupation under Article 19(1)(g). Emphasized discrimination against individuals from other states, creating artificial barriers.
• Violation of constitutional provisions: Article 35 prevents state legislatures from legislating on matters within the purview of Article 16(3). Sections 6 and 8 of the Act were deemed as promoting an ‘Inspector Raj,’ enhancing state control over private employers.

Advantages of job reservation in private sector:

• Constitutional validity: Constitutionally justifiable as Article 16 doesn’t prohibit domicile-based reservation. Valid within the constitutional framework and complies with the spirit of equality.
• Equality and equal protection: Promotes equality by reserving jobs for the weakest sections of society. Aligns with the principle of Equal Protection of Law under Article 14.
• Solution for unemployment: Addresses unemployment challenges by providing job opportunities to locals. Considered a suitable solution amid stagnant job creation.
• Constitutional special provisions: Justified by special provisions in the constitution for certain states like Andhra Pradesh and Telangana. Aligns with constitutional flexibility under Article 371D and E for unique circumstances.
• Boost to local economy: Local hiring contributes to the local economy by circulating earnings within the community. Companies supporting local employment may stimulate economic growth.
• Operational cost reduction: Hiring locally reduces relocation costs for companies. Lower operational costs can lead to more competitive pricing for goods and services.
• Improved productivity: Local employees are likely to be more familiar with the language, culture, and business environment. Enhances productivity and efficiency in the workplace.

Disadvantages of job reservation in private sector:

• Investor exodus risk: May trigger an exodus of investors, impacting sectors reliant on skilled manpower. Example: Haryana faced a 30% drop in investments due to the local reservation law.
• Impact on existing industries: Raises concerns about hindering the free movement of manpower, affecting existing industries. Potential shift of businesses from the state to other regions.
• Talent crunch in specific sectors: Imposing reservations on gig and platform companies could result in a severe talent shortage. Risks impeding the growth of industries relying on specialized skills.
• Constitutional violation: May be against the constitutional guarantees of freedom of movement and employment. Contradicts Articles 14, 15, 16, and 19 that safeguard against discrimination based on birthplace.

Way forward:

• Legal review and amendment: Conduct a comprehensive legal review and amend the law to address constitutional concerns.
• Strategic implementation of reservation: Implement the reservation policy in a manner that doesn’t impede the free movement of labor across the country.
• Focus on economic recovery: Emphasize economic recovery as a means to address the concerns prompting Job for Locals Legislations (JRFL) and generate ample job opportunities.
• Explore alternatives: Investigate alternative mechanisms to address rising unemployment while respecting constitutional principles.
• Conduct impact assessment: Undertake a thorough impact assessment of the reservation law on industries and employment.
• Encourage inclusive employment practices: Promote voluntary adoption of inclusive employment practices by companies.
• Enhance public awareness: Increase public awareness regarding constitutional rights and complexities of the issue.

Source: www.thehindu.com

OECD report on climate finance

GS- III >> Environment>> Climate Change

Context: OECD report reveals developed countries’ failure to meet the $100 billion/year climate finance promise in 2021.

About OECD report on climate finance:

• Release date and authority: The report was released on 16 November 2023 by the OECD Secretary-General, signifying the organization’s commitment to transparency and accountability in reporting on climate finance.
• Objective and scope: The report aims to present aggregate trends in annual climate finance provided and mobilized by developed countries for developing nations from 2013 to 2021.
• Timeframe consideration: The analysis covers the period from 2013 to 2021, comprehensive understanding of long-term trends in climate finance dynamics.

Key findings of the report:

• Total climate finance increase: In 2021, developed countries provided and mobilized USD 89.6 billion for climate finance in developing nations, reflecting a notable 7.6% increase from the previous year.
• Dominance of public climate finance: Public climate finance, encompassing bilateral and multilateral sources, nearly doubled from USD 38 billion in 2013 to USD 73.1 billion in 2021.
• This sector accounted for the majority of the total USD 89.6 billion in 2021, showcasing the significant role of public funding in climate finance.
• Adaptation finance decline: Adaptation finance experienced a decline of USD 4 billion (-14%) in 2021, resulting in a reduced share of total climate finance from 34% to 27%.
• This decrease highlights challenges in sustaining adaptation efforts amidst changing financial priorities.
• Rise in cross-cutting finance: Cross-cutting finance, addressing multiple climate-related aspects, witnessed a noteworthy increase from USD 6 billion in 2020 to USD 11.2 billion in 2021.
• The surge in cross-cutting finance underscores a broader approach to addressing diverse climate challenges.
• Mobilised private climate finance: Comparable data for mobilized private climate finance are available from 2016 onwards.
• In 2021, mobilized private climate finance amounted to USD 14.4 billion, constituting 16% of the total climate finance.

Significance of OECD report on climate finance:

• Insight into rich countries’ approach: The report provides a valuable insight into the perspectives and strategies of wealthy nations, including the U.S., U.K., Germany, France, Switzerland, and Canada, regarding climate finance.
• Preparation for COP28 talks: The release of the report precedes the COP28 climate talks scheduled in the United Arab Emirates (UAE). It offers a preview of developed countries’ positions on climate finance, setting the stage for discussions at the upcoming summit.
• Evaluation of COP26 pledge: Against the backdrop of the COP26 talks in Glasgow (2020), where developed nations pledged to double adaptation finance, the report evaluates the progress made. It addresses the shortfall in meeting the $100 billion climate finance goal by 2020.
• Impact on developing countries: The failure to mobilize sufficient climate finance has repercussions for developing countries. It hampers their capacity to address climate mitigation, such as reducing emissions through renewable energy, and adaptation needs, including building climate-resilient agriculture.
• Trust and Credibility concerns: Inadequate climate finance raises concerns about the commitment of developed nations to tackle the climate crisis.

Suggestions:

• $100 Billion goal evaluation: The report critically evaluates the $100 billion goal set during COP15 talks. It highlights that this figure lacks a robust foundation, emerging without a comprehensive assessment of the actual climate investment needs of developing countries.
• Scepticism regarding goal achievement: Despite preliminary claims in the report suggesting the likely achievement of the $100 billion goal in 2022, it emphasizes the need for scepticism. The data is neither finalized nor published, urging caution in accepting the reported figures.
• Origins of the $100 Billion goal: The report underlines that the $100 billion goal was not derived from a thorough assessment but emerged during COP15 talks without a concrete basis. This context raises questions about the adequacy and credibility of the goal.
• Future financial requirements: By 2025, an estimated $1 trillion annually will be needed for climate investments. This amount is projected to increase significantly to approximately $2.4 trillion per year between 2026 and 2030.
• Unmet $100 Billion Goal: The report emphasizes that the $100 billion goal remains unmet, making it pale in comparison to the escalating financial needs predicted for developing countries. The unfulfilled goal raises concerns about the commitment of developed nations to adequately support climate actions in the global south.

Way forward:

• Impact on COP28 discussions: As the report provides insights into the climate finance stance of developed countries, it becomes crucial ahead of the COP28 climate talks in the UAE. Climate finance is expected to be a key point of contention during the discussions.
• Private sector challenges: The report sheds light on challenges in private sector scaling for climate investments. Stagnation in private financing and the need for government intervention highlight obstacles in achieving climate action goals.
• Transparent assessment: Conduct a transparent and comprehensive assessment of the actual climate investment needs of developing countries. This should form the basis for setting realistic and impactful financial goals.
• Re-evaluation of $100 Billion goal: Reevaluate the $100 billion goal, taking into account the evolving financial requirements of developing nations.
• Long-Term financial planning: Develop long-term financial plans that go beyond the $100 billion goal. Acknowledge that the financial needs of developing countries are expected to rise significantly, reaching approximately $2.4 trillion annually by 2030.

Source: www.thehindu.com