Careful, now

If newspaper reports are to be believed, the government is accepting many of the recommendations of the Sachar Committee. There is no harm at all in steps like creating a diversity index that will be monitored on a regular basis, because the government should track a problem of systemic bias if that has been established, to watch the emerging trends. However, asking banks to give preference to borrowers from a minority community is on another plane, because it interferes with what should be a transaction guided by purely commercial considerations. It can be no one's case that the Muslims, or the Scheduled Castes/Scheduled Tribes and the poorer members belonging to the Other Backward Castes do not suffer from deprivation. But the question is whether it is wise politics to bring a communal colour to commercial decisions.

To make things more palatable for public sector banks, which are being asked to offer such loans, reports suggest that the Reserve Bank of India has agreed to include "minority communities" in the list of "weaker sections", to whom banks are already mandated to lend a tenth of their total loans. But there is more than one minority community, and it might be hard to establish that Sikhs, Jains and Christians are dealt with poorly by banks. If that reduces the problem to Muslims and Buddhists (many of whom may be converts from the Scheduled Castes), the less intrusive and divisive course of action would be for the government to offer a subsidy to all "weaker sections" as established by income categorisation. This would be a positive signal to the banks rather than the negative one of setting quotas. Another solution would be to ask banks to open more branches in Muslim localities in the various towns and cities, if they happen to be under-banked. That would automatically increase the number of transactions done with this one community.

From a conceptual perspective, it is not clear that a lower share of bank loans for Muslims is the same thing as denying them the required credit. It is not clear that the Sachar committee has established that Muslims need bank credit, ask for it and are denied it by bankers. Nor is it clear whether the Islamic view on charging interest (frowned on as usury) is a relevant factor. In short, the logical basis for a quota system should be checked carefully before embarking down this road""and asking bankers to keep a record of loan requests from minorities that are turned down!

Though it did not ask for separate electorates, in its quest for getting what it called "corresponding representation in government structures" and "other methods to enhance political participation of the community", the Sachar Committee had come up with a list of assembly constituencies where Muslims were in the majority but the seats were reserved for Scheduled Castes""this, the committee said, reduced the chances of Muslims getting elected. The unstated implication is that the manner in which reserved seats are selected has been done with an eye to using this as a tool to reduce Muslim representation in the legislatures. If there is a systematic pattern to this, and the SC-reserved constituencies are those where the Scheduled Castes account for a small part of the population, it should of course be looked into, and the government has said it will set up a high-level committee to review the Delimitation Act and that this will also look at the Sachar committee's concerns. However, the government should be careful about not overstepping the line and going in for a new category of reserved seats for minorities. The trick is to address systemic problems without creating new ones.