Over decades it has been witnessed across the world that the governments have tendencies to resort to protectionism when things at domestic level get tough and their economic policies fail to perform. The protectionist tendencies of the central governments of the nation are often found to transact to the states to inspire them to indulge in such protectionist practices ignoring the fact that such practices in domestic markets often have only emotional outrage than any empirical evidence of bringing in any substantial benefits.
The empirical evidences suggest that protectionism often leads to inefficiencies in economies. However, to some extent, the limited protectionist approach to the economic responses at national level against import and dumping has quite a different dynamics due to heterogeneous global market conditions than such protectionist practices in domestic (homogeneous) markets.
The ongoing trade war between the USA and China is an example of this protectionist approach. In many countries, states at different times have resorted to protectionism against people coming from other states or countries. Now it seems that Indian states are inspired to resort to the protectionism! Haryana has passed a bill that makes it mandatory for the private sector to provide 75 percent reservation in the jobs that offer salary of less than ₹50,000 to local job seekers. Rumour mills say that Uttarakhand is also contemplating such a bill! In coming days, many other states may join the chorus!
But will it be beneficial to Indian economy as whole and states in general? Is not India on the way to undo all the efforts of creating one market? Can India afford this new type malaise? Is the central government unable to see the reminiscences of this new movement?
Rajeev Upadhyay
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