The screw of the 93^rd Constitutional Amendment Act has turned another round. The Supreme Court has permitted institutions belonging to the Muslim community in Maharashtra to hold separate Common Entrance Test for admission to professional courses for academic year 2006-07.

'Muslim institutes can hold separate CET'

Now that we are to have separate admission standards for different communities, efficiency demands that each community holds its own examinations and then selects its candidates for admission.

One would expect an extension of such an examination regime to other communities as the quota system becomes more extensive. The step beyond that, which it will be difficult to deny, would be to create an administrative system so that people do not falsely claim to belong to a 'disadvantaged community' for the purpose of admission to college and promotion in jobs. Many inspectors will also be required to ensure that the promotions within different organisations satisfy various caste equations.

Ideas are like currency and according to Gresham's Law bad currency drives out the good. The political class in India remains paralysed before the power of the following two immortal principles from the Mandal Commission (volume 1, chapter 5):

Newspaper columnists in India speak of how quotas in India are like those in the United States. This is simply not true. Unlike in India, there are no mandated numerical quotas for ethnic or racial groups in any American college. But it is true that many colleges and universities have devised affirmative policies that encourage the admission of minorities.

The reservation issue: Complete coverage

On the other hand, numerical quotas were used in Europe in the last two centuries. There were strict limits on how many Jewish students could be admitted into colleges, a special case of numerus clauses (Latin for 'restricted number'), and the same principle as of caste quotas. In its strictest form, the idea was to ensure that the number of Jewish students did not exceed its proportion in the general population.

A Numerus Clausus Act was introduced in Hungary in 1920 according to which Jewish students would be no more than 6 per cent of the student population. In Germany [Images], the Jewish quota, introduced in 1933 by Hitler [Images] had a ceiling of 1.5 per cent for high-school and university enrollment (5 per cent in a single school) for the Jews.

Jews who were concerned about the education of their children were forced to bribing the authorities, changing their religion, or getting out. Such numerus clauses laws led to wide emigration from Hungary and Germany into the United States before the Second World War.

But it will be wrong to assume that the quotas introduced by Manmohan Singh [Images] will lead to a denouement as dramatic as Hitler's quotas. The Germans are famous for their efficiency: they were effective in their enforcement of policy. The Indian bureaucracy, which will be in charge of enforcing the new quota regime, is one of the most corrupt in the world.

It has been reported that fake caste certificates can be purchased easily for 10,000 rupees. Many people are also not alarmed because the government will take years to establish an effective regime that will ensure that the declarations of caste in the forms of the students are accurate. Perhaps this will not happen in decades if we were to go by the fact of widespread benami ownership to get around land ceiling laws.

Why reservations won't work

Nevertheless, Parliament will have to enact legislation to determine punishment for the crime of the student declaring that he belongs to a 'backward caste' not because he was born into it, but because he feels that is where his heart is. Just imagine the amount of legal thought and administrative energy that will have to be put into the resolution of such questions!

Quotas in the IITs or IIMs hardly matter in the larger scheme of things because they touch a mere few thousand students. From a philosophical point of view, it is difficult to counter the argument that these institutes are not particularly vital to the nation since a vast majority of their graduates end up working in the West.

India's knowledge companies operate in a global marketplace and they will go wherever they have to for skilled engineers and managers. Just the other month, TCS [Get Quote] (Tata Consulatancy Services) announced that it was going to hire 1,000 American workers.

Indian software companies have also begun establishing research centres abroad, including China, where higher education system is much less politicised that in India. Therefore, a fall in the standards of education at the elite institutes in India will not be catastrophic, especially because a huge number of Indian students are studying in Western universities, and many of them will return if the job terms are attractive enough.

Meanwhile the pressure on the private industry in India to introduce voluntary caste quotas is building up. Social Justice and Empowerment Minister Meira Kumar has threatened legislation if nothing is done in the next few months. But meddling by the government in the hiring and promotion might very well induce some private industry to decide to do business elsewhere.