An Economic Analysis of the Reservation Policy in India

Abstract

Persistent socio-religious stratification in India has resulted in widespread inequity in all spheres of life, particularly for those born in the lower ranks of the social caste order. The effects of these inequities are visible amongst the lower caste in the form of poverty, low standards of living, unemployment, and lack of education. To counter this, India’s government introduced a reservation policy as a form of affirmative action that reserves a percentage of legislative seats for the Scheduled Castes, Scheduled Tribes, and Other Backward Castes in the spheres of education, employment, and politics. This paper looks into the usefulness of this policy in making better opportunities available for the Scheduled Castes and Scheduled Tribes and examines its effectiveness using economic analysis. In doing so, the paper explores certain problems, such as ambiguous data, child labor, and rent-seeking behavior, and recommends setting up better screening methods to rectify these issues in an effort to ensure equitable distribution of welfare benefits amongst the recipients of the reservation policy.