NEW DELHI: The new government is on a collision course with the powerful corporate sector and the relatively affluent middle class because of its plans to enforce affirmative action on behalf of socially deprived groups in India's caste hierarchy.

The seriousness of the United Progressive Alliance (UPA) government, led by the Congress Party, in making good promises to 'socially empower' an estimated 500 million people or half of India's population was first made known through the customary presidential speech at the opening of the new Parliament on June. 7.

"The government is sensitive to the issue of affirmative action, including reservations in the private sector and it is committed to faster socio-economic and educational development of the scheduled castes and scheduled tribes," President A P J Abdul Kalam declared.

Kalam's speech, drafted by the Congress party and its communist allies, drew howls of protest from 'India Inc.', as the country's powerful corporate world, largely centred in the western port city and business hub of Mumbai, is popularly referred to.

Rahul Bajaj, outspoken owner of one of the world's largest scooter and two-wheeler manufacturing facilities, said the government's plans could "hurt private sector productivity and efforts to be internationally competitive". He would have to seriously reconsider further investments, he said.

An industrialist who asked not to be named said it is the proposed penalties involved in the affirmative action plan that worry him. "What if we can't find the right people for the jobs? We could end up being penalised or have to shut shop."

The western state of Maharashtra, of which Mumbai is capital, is turning out to be the test case for the Congress-led government to try out its new policy of affirmative action and see whether it will help the party retain the state when it elects a new assembly around September this year.

Battle lines are already being drawn around the issue with the right-wing, pro-Hindu coalition of the Bharatiya Janata Party (BJP) and the Shiv Sena already declaring opposition to the policy of reserving jobs in the private sector for lower caste people.

But the Congress government in the state, led by Chief Minister S. K. Shinde, himself a 'dalit' or member of the lowermost caste has already begun knocking on the doors of some of the best- known corporate names in Mumbai and asking them what they are doing about complying with the new policy.

Officials said the famed Taj group of hotels, which has leased prime property from the state in the Nariman Point area, has already been warned that it cannot hope for extensions when lease renewals come up in 2005 - unless it undertakes to comply with the policy of reserving half of all new vacancies for lower caste people.

According to the officials, all private companies that seek to renew land leases in Maharashtra or seek assistance or subsidies from the state government will have to show compliance with the affirmative action policy.

The same principle may gradually be extended to the rest of India. But affirmative action is not new in India. In fact, the country's 1950 Constitution has clear provisions to reserve jobs in government controlled jobs, educational institutions and legislatures at the state and central level.

Initially, reservations were available only for the scheduled castes - those officially recognized as being on the lowermost rung of the Hindu caste hierarchy or 'dalits' and for scheduled tribes.

But when they were extended in 1990 to other socially backward groups to cover nearly 50 per cent of the population, it unleashed social and political forces that the country is still grappling with.

The rise of the right-wing BJP during the nineties was largely due to reactions from upper-caste Hindus, who stood to lose the domination they traditionally enjoyed in Indian society through a monopoly over influential jobs and situations in the government and educational institutions.

However, the nineties also saw a steady decline in the role of the government as employer because it coincided with structural reforms that favoured the growth of private enterprise and involved the privatization of public sector enterprises.

In 2001, when the BJP government sold off controlling interests in the public sector Bharat Aluminium Corporation Ltd (BALCO) to Sterlite Industries, it did away with reservation rights enjoyed by lower caste people and tribal groups in an industry located in a designated tribal area.

"This kind of privatisation impinges on the one hand on the traditional and constitutional rights of tribals to their land and, on the other, eliminates employment rights of other caste groups," said P. S. Krishnan, a former bureaucrat in National Commission for backward classes.

Indeed, election analysts attribute the success of the Congress Party and its left-wing allies in the UPA coalition in the April and May elections to sentiments by large sections of people, particularly from among the socially deprived groups, that they are being left behind by more than a decade of structural reforms. -Dawn/The Inter Press News Service.