India's caste quotas reach 60% as China's meritocracy gains ground

India's affirmative-action system now blocks almost 60% of government jobs from open competition, while China's merit-based model fuels economic growth that many Indians envy.

India's long-running debate over caste-based quotas has a new benchmark: China. As politicians push to expand reservations beyond the Supreme Court's 50% ceiling, opponents of affirmative action point to China's brutal meritocracy — embodied by the gaokao exam reinstated in 1977 — as a model that has lifted hundreds of millions out of poverty and turned the country into a middle-class nation.

"The biggest challenge for 21st-century India is how to go forward with democracy and merit," said Gurcharan Das, former chief executive officer of Procter & Gamble India, speaking at a New Delhi debate late last month. Das contrasted India's quota-ridden system — what critics call DEI on steroids — with China's "remarkable success" at reducing poverty and building a middle class through merit-based education and leadership selection.

Almost 60% of central-government and public-sector jobs and student seats in government-funded universities, including India's most prestigious engineering, medicine and management schools, are closed to open competition. The Supreme Court ruled in 1992 that no more than 50% of such positions could be reserved for historically disadvantaged castes, but politicians across the spectrum have pushed to exceed that ceiling. Prime Minister Narendra Modi's government bypassed it in 2019 by creating a 10% quota for poor people not already covered by caste reservations. Last year, the government announced a census to enumerate the country's castes officially, widely seen as a precursor to raising quotas further.

India's 1.5 billion people are divided into more than 3,000 castes and 25,000 subcastes. Only about 30% of Indians belong to "general castes" ineligible for quota benefits, according to a Pew Research Center survey. These are primarily Brahmins, Kshatriyas and Vaishyas — the top three tiers of the traditional hierarchy. Most Indians belong to the remaining categories: Shudras (classified as "Other Backward Classes"), Dalits (formerly "Untouchables") and tribals outside the caste system. At independence, India adopted a modest 12.5% quota for Dalits, the most disadvantaged group. Over the decades, quotas have expanded to encompass politically powerful landowning castes.

The Meritocracy Alternative

China's approach offers a stark contrast. The gaokao, a grueling national exam reinstated after Mao Zedong's Cultural Revolution briefly experimented with privileging children of peasants and workers, is widely regarded as "an island of transparency and fairness in an ocean of backroom dealing and corruption," according to anthropologist Zachary Howlett, writing in 2022. It enables bright students from poor backgrounds to compete with privileged but less talented peers.

The divergence carries economic consequences. In his 2004 book "Affirmative Action Around the World," economist Thomas Sowell warned that poorly conceptualized affirmative-action policies — often sold as temporary redress — become almost impossible to reverse, breed resentment among disfavored groups, sap the self-confidence of beneficiaries and erode national competitiveness.

India's policies have contributed to talent flight toward countries seen as more meritocratic. Silicon Valley investor Deedy Das analyzed the career paths of 87 Indians who won medals at the International Physics Olympiad between 2001 and 2019. Of the 69 whose career data he located, 70% live in the United States and only 25% in India.

Prominent politicians, including Rahul Gandhi of the opposition Congress Party, seek to extend quotas to the private sector. If India is lucky, China's success will discredit its affirmative-action system — much like the collapse of the Soviet Union discredited state-led economic planning — and prompt a shift toward meritocracy. If not, domestic politics will continue to trump common sense, with implications not just for India's emergence as a world power but for the United States, where liberal politicians increasingly embrace identity politics and racial preferences. No other country has imposed such wide-ranging quotas for as long as India has, and the Indian experiment serves as a cautionary tale.

This article is for informational purposes only and does not constitute investment advice.