Conundrum on Economically Weaker Section —Having Reservations about Reservation

Introduction

If the local Government included in this category of reservations such a large number of seats, I think one could very well go to the Federal Court and the Supreme Court and say that the reservation is of such a magnitude that the rule regarding equality of opportunity has been destroyed and the court will then come to the conclusion whether the local Government or the State Government has acted in a reasonable and prudent manner.

Dr B. R. Ambedkar in Constituent Assembly Debates on 30-11-1948 Part II.[1]

History is witness; making India independent was not a cakewalk. Our great leaders had made every stone unturned to unite the newly independent but fragmented India and shape it into an Akhand Bharat. The integration of States was made possible after pacifying every section of Indian population through deliberate talks, meetings, agreements, and policies. One such policy for socially and educationally backward sections was “reservation”. Back in 1948, when the reservation policy was proposed, it was welcomed with an overwhelming response, yet with an intention to initially limit its implementation to the period of 10 years which could be extended, only if necessary.

Since then, more than 75 years have passed, Indian politicians still seem to play the “reservation” card in pursuit of their political advantage, and Indians are still brawling for quotas in educational institutions and jobs. A little while ago, in January 2019, the present Government brought a new reservation policy granting 10% reservation of seats in government jobs and educational institutions for economically weaker section (EWS). The persons who will fall into the category of EWS are those who, are not covered under the scheme of reservation for Scheduled Castes (SCs), Scheduled Tribes (STs), and Other Backward Classes (OBCs).[2] This was facilitated by incorporating Articles 15(6) and 16(6) by the 103rd Constitutional Amendment Act on 14-1-2019.[3]

Since then, debates on EWS reservations have been the talk of the town. Numerous writ petitions were filed challenging the constitutional validity of the 103rd Constitutional Amendment in Supreme Court.[4] Though final decision on validity of EWS reservation and 103rd Constitutional Amendment is yet to be decided by the Supreme Court, the State and Union Governments are implementing EWS reservation scheme under the principle that there is always a presumption that the legislature understands and correctly appreciates the need of its own people and therefore, every legislation enacted by Parliament or State Legislature carries with it a presumption of constitutionality.[5]

In July 2021, Central Government issued notifications regarding 27% reservations for OBCs and 10% quota for EWS in NEET All India Quota seats. These created furors among doctors which led them to protest and document multitudinous writ petitions in the Supreme Court. The Supreme Court heard all writ petitions under the case, Neil Aurelio Nunes v. Union of India.[6] Though the Supreme Court passed an interim order in this case allowing 27% reservation to OBC and 10% to EWS for the current academic cycle but the question is still unanswered — Is EWS reservation constitutionally valid?

To derive to the conclusion to this question, the Supreme Court sought clarifications from the Central Government by asking whether the Union Government endeavoured to take any exercise before deciding the criteria for the determination of the EWS category, whether or not EWS criteria is over-inclusive and arbitrary at the same time as it provides identical income cap both for the OBC and EWS categories, whether the regional income differences is considered before arriving at Rs 8 lakh income limit and many more related questions. This article endeavoured to analyse the answers to such micro questions in order to derive at solution to one mega question — Is EWS reservation constitutionally valid?

Definition of economic weaker section —A game changer

Definitions are of the utmost significance in legal thought, and that terms which cannot be defined should be dropped.[7] Central Government defines EWS[8] as –

“Persons who are not covered under the scheme of reservation for SCs, STs and OBCs and whose family has gross annual income below Rs 8 lakh are to be identified as EWSs for benefit of reservation. Income shall also include income from all sources i.e. salary, agriculture, business, profession, etc. for the financial year prior to the year of application. Also, persons whose family owns or possesses any of the following assets shall be excluded from being identified as EWS, irrespective of the family income:

  1. 5 acres of agricultural land and above;
  2. Residential flat of 1000 sq ft and above;

iii. Residential plot of 100 sq yd and above in notified municipalities;

  1. Residential plot of 200 sq yd and above in areas other than the notified municipalities.”

A bare reading of the definition seems to be clear, comprehensive and unambiguous, but subsequent paragraphs of this article show this definition grossly violates Articles 14[9], 15[10] and 16[11] of the Constitution.

An arbitrary definition

“It is an injustice to treat unequals as equals, just as it is an injustice to treat equals as unequals.”– Aristotle.

Reservation of OBC is based on rule of exclusion which excludes socially advanced sections of people from OBC category (creamy layer) from the purview of reservation. Criteria for determining creamy layer are given under Annexure II of Official Memorandum on Issue of Instructions on Reservation for the Scheduled Castes, Scheduled Tribes and Other Backward Classes in services under the Government of India.[12] Out of 6 categories that have been set out for determining creamy layer among OBCs, one category is income/wealth test. Sons and daughters of persons having gross annual income of Rs 1 lakh or above for a period of three consecutive years would fall within the creamy layer and would not be entitled to get the benefit of reservation available to the Other Backward Classes.[13] The income slab for ascertaining the creamy layer sections was subsequently raised to Rs 2.5 lakhs, Rs 4.5 lakh, Rs 6 lakhs vide different notifications. The current income slab for creamy layer status has been raised to Rs 8 lakhs per annum.[14] Therefore, income/wealth test to determine rule of exclusion (creamy layer) and rule of inclusion (EWS) for the benefit of reservation is same.

By employing only income/wealth test to determine the category for EWS reservation, the Government has bypassed a catena of Supreme Court judgments[15], where the Court has held that neither income by itself nor caste by itself can be the sole criteria to determine social backwardness, and both income and caste together are relevant in determining the backwardness of citizens but, nevertheless, the Government has brought reservation solely based on economic factor. Not much scrutinising on the debate whether or not it is constitutionally valid to make economic factor sole criteria to determine EWS reservation; this paper will remain focus on analysing the “economic factor” already set by the Government to determine EWS reservation.

Before further examining the income/wealth test of EWS reservation through a hypothetical situation, it is pertinent to understand the meaning of “socially and educationally backward”. In Indra Sawhney v. Union of India[16] the following observation was penned down:

The expression “backward class of citizens” is neither defined nor explained in the Constitution…. However, the backward class or classes can certainly be identified with reference to caste along with other criteria nature of traditional occupation or trade, poverty, place of residence, lack of education and these factors are not exhaustive and in communities where caste is not recognised by the above recognised and accepted criteria except caste criterion…a caste is also a class of citizens and if the caste as a whole is socially and educationally backward, reservations can be made in the favour of the caste.

Considering a hypothetical situation, where there are 2 families, one is General category (herein referred as Family A) and the other is OBC category family (herein referred as Family B).  Each has 4 members – father (businessman), mother (housewife), candidate, and a minor sibling. For many consecutive years, Family A’s annual income was Rs 8,50,000 (including from all sources such as salaries, agriculture, traditional artisanal professions, etc.) and pay tax accordingly, but due to temporary loss in business, their 2020-2021 annual income dropped to Rs 7,00,000 (including from all sources such as salaries, agriculture, traditional artisanal professions, etc.).Therefore, for the year 2020-2021, Family A falls under the definition of economic weaker section and the candidate can claim reservation under EWS category. On the other hand, Family B generally has annual income of Rs 6,00,000 (including from all sources such as salaries, agriculture, traditional artisanal professions, etc.) but due to unpredictable profit in business for 3 consecutive years the family income has raised to Rs 8,00,000 (including from all sources such as salaries, agriculture, traditional artisanal professions, etc.). This implies that now a candidate from Family B falls under creamy layer status and cannot claim reservation. This implies that backward class community who are socially and educationally deprived for years but only due to economic growth in 3 consecutive years they are not been given reservation benefit, but parallel to this, general category community who are neither socially nor educationally nor economically deprived but due to loss in business in a single year will make them eligible for reservation.

The Central Government tries to explain the differences between Rs 8 lakhs income test of EWS criteria and creamy layer criteria on the basis of definition of “family”, constituents of “annual income” and considering 3 consecutive years in OBC and prior year annual income in EWS. But from this hypothetical situation it can be concluded that despite the differences between the two Rs 8 lakh income slabs, the Government are treating unequal equally and therefore violate Article 14 of the Constitution.

Even though Central Government accepts the proposal to increase the income limit of Rs 8 lakhs to 12 lakhs for determining the creamy layer among OBCs17, the over-inclusive nature of Rs 8 lakh income slabs for determining EWS category will still make it a problematic policy to implement.

An over-conclusive definition

In India, the income tax structure is designed in such a way that up to Rs 2,50,000 annual income, no tax rate is levied. Above Rs 2,50,000, different tax rate is imposed according to different income slab. It is pertinent to note that neither in existing tax regime nor in new tax regime, Rs 8,00,000 is made upper limit or lower limit of any income tax slab. The present government reports that for Financial Year 2018-2019 till February 2020, only 1% of the Indian population pays income tax. Meaning thereby, out of 138 crore populations, only 5.78 crore individuals are taxpayers and out of these total taxpayers, only 1.46 crores individual filed income tax returns above Rs 5 lakhs income tax slab.18It would be wrong to argue that due to tax evading practices in India there are so few taxpayers. As per the data released by the Government, 75% Indians have annual income less than Rs 5lakhs and 17% Indians have income between Rs 5 lakhs to 10 lakhs.19 According to the Government’s Economic Survey 2020-2021, per capita income of India in 2020-21 is Rs 1,26,96820, which means the average Indian earns Rs 1.3 lakhs (approx.) in a year. These statistical data implies that the bulk of population will be eligible for EWS reservations within Rs 8 lakhs income bracket, making it an unreasonable and irrational threshold.

Inequality among Indian States

In a country like India, where inter-State disparity and regional income inequality prevails across the Indian States21, Government has imposed Rs 8 lakh income cap as a uniform income-based threshold which is uniformly adopted across the country. As per  RBI Handbook of Statistics on Indian States, per capita net State domestic product for the year 2020-2021 is highest in Goa (Rs 4,72,216) followed by Sikkim (Rs 4,24,454) and Delhi (Rs 3,54,004) and lowest in Bihar (Rs 46,292), Uttar Pradesh (Rs 65,431) and Jharkhand (Rs 75,587).22 This implies that State economic production value attributed to per person of Goa, Sikkim and Delhi is much higher than that to per person of Bihar, Uttar Pradesh and Jharkhand. Under this background, it can be concluded that majority population from Bihar, Uttar Pradesh, Jharkhand and other low per capita (NSDP) States will fall under 10% EWS reservation. Therefore, Rs 8 lakhs income criterion is over-inclusive.

On the substratum of the above discussion, it can be very well stated that the scheme of EWS reservation suffers from the vice of non-application of mind by the authority concerned, as the Union Government had “mechanically” adopted Rs 8lakhs cut-off without endeavouring to undertake any appropriate exercise before determining the criteria for EWS reservation. This act of arbitrariness by the Government manifests flagrant violation of the constitutional mandate of Article 14.

Is even10% valid

The Report of the National Backward Classes Commission states forward Hindu caste and communities (which includes Brahmins, Bhumihars, Rajputs, Marathas, Jats, Vaishyas-Bania, Kayasthas and other forward Hindu castes) constitute 17.58% of the population.23 In addition to these 17.58%, Buddhist (0.67%) and Jains (0.47%) are also not covered under any scheme of reservations. This data has been recently used by  the Supreme Court in deciding the civil appellate/original jurisdiction case Jaishri Laxmanrao Patil v. Chief Minister (also called Maratha Reservation case).24 Based on the calculation of above data, it can be estimated that the total population outside the purview of reservation benefit in India is not more than 20%. For 20% socially and educationally forward population, the Government has reserved 10% seats in government jobs and education institutions with over-inclusive income brackets.

Though 50% has been set as the maximum limit for caste-based reservation, but this ceiling can be crossed in extraordinary circumstances.25Unfortunately, the Government is treating the underline situation as extraordinary in order to validate the breaching of 50% reservation ceiling while implementing 10% EWS reservation. Before delving into the discussion of whether the present matter falls within the ambit of an extraordinary situation, it is necessary to understand what comes under an extraordinary situation. Indra Sawhney case26 has given illustration regarding certain extraordinary situation in para 810 of the said judgment:

  1. … It might happen that in far-flung and remote areas the population inhabiting those areas might, on account of their being out of the mainstream of national life and in view of conditions peculiar to and characteristical to them, need to be treated in a different way, some relaxation in this strict rule may become imperative. In doing so, extreme caution is to be exercised and a special case made out.

The Supreme Court in para 475 of Maratha Reservation case27agreed that the expression in far-flung and remote areas” incorporates geographical test and “the population inhabiting those areas might, on account of their being out of the mainstream of national life and in view of conditions peculiar to and characteristical to them” incorporates social test. In the same paragraph of the abovementioned case, the Supreme Court held that:

475 … one of the social conditions in para 810 (of Indra Sawhney case28) is that (not) being within the mainstream of national life, the case of Maratha does not satisfy the extraordinary situations as indicated in para 810 of Indra Sawhney29, as the Marathas are in the mainstream of the national life….30

The above discussion makes it clear that due to over-inclusive nature of EWS definition, people from mainstream of national life are also covered for the benefit of reservation and therefore, the present case does not quench the extraordinary situations as specified in Indra Sawhney judgment31. Overstepping the 50% reservation maximum cap without there being any instance of extraordinary circumstances clearly flouts Articles 14 and 16 of the Constitution, which makes the enactment ultra vires.32

Under this background, it would not be wrong to conclude that the EWS reservation scheme criteria have been implemented without taking due consideration of gross domestic product (GDP)/per capita income, inter-State economical differences, rural urban purchasing power and other various data. This is a blatant manifestation of political moves in the guise of policy implementation with a lack of up-to-date and quantifiable data. In the line of a series of recent judgments, the Supreme Court and High Courts33 have called attention to the significance of quantifiable data as a mandatory prerequisite for the reservation scheme in education and employment. In Jaishri Laxmanrao Patil v. Chief Minister34, the Supreme Court reiterated the observation held in M. Nagaraj v. Union of India35 that if they are making provisions related to reservations, the State has to collect quantifiable data showing backwardness of the class and inadequacy of representation. The Supreme Court in Maratha Reservation case36 has struck down the reservation policy for Maratha as the Government could not back up the reservation policy with appropriate, adequate and quantifiable data. Same might be the fate of EWS Reservation policy, if the authority concerned could not come up with the necessary modification in tuned with appropriate and quantifiable data.

Conclusion

In India, the “reservation” is getting deceptively complex with each passing day. Judiciary with its legal power consistently engrossed in simplifying the puzzle posed by the regular conflicting interest between the Indian politicians, who once in 5 years deliberate on “reservation” as their election manifesto to secure their vote bank and the stakeholders, who for the entire 5 years agitate either “for” reservation or “against” reservations. The present Government by bringing EWS reservation has though chosen bold path but with wobble steps which, if get implemented will result in more harm than good. Considering the present scenario, the Supreme Court can lead the case to three different possible situations: first, upheld the 103rd Constitutional Amendment Act, 2019; second, partially upheld by recommending certain modification in income bracket and quantum of seats reserved; and third, quash the 103rd Constitutional Amendment Act, 2019 on basis of sole economic criterion and exceeding 50% reservation cap. Whether the Supreme Court ends the controversy with these expected outcomes or adopts a different strategy to decide the case is yet to be seen.


*5th year student, B.A-LL.B, National University of Study and Research in Law, Ranchi. Author can be reached at subhashni.kumari@nusrlranchi.ac.in.

[1]Constituent Assembly Debates, Vol. 7, 30-11-1948 speech by Dr B.R. Ambedkar, p. 702.

[2]Government of India, Ministry of Personnel, Public Grievances & Pensions Department of Personnel & Training, Official Memorandum No.36039/1/2019-Estt (Res) (notified on 31-1-2019).

[3]Constitution (103rd Amendment) Act, 2019, Arts. 15(6) and 16(6).

[4] Janhit Abhiyan v. Union of India, 2020 SCC OnLine SC 624.

[5]State of Bombay v. F.N. Balsara, AIR 1951 SC 318.

[6] 2022 SCC OnLine SC 75.

[7] Huntington Cairns, A Note on Legal Definitions, 36 Columbia Law Review 1099, 1099 (1936),

<https://www.jstor.org/stable/1117047>.

[8]Government of India, Ministry of Personnel, Public Grievances & Pensions Department of Personnel & Training, Official Memorandum No.36039/1/2019-Estt (Res) (notified on 31-1-2019).

[9]Constitution of India, Art. 14.

[10]Constitution of India, Art. 15.

[11]Constitution of India, Art. 16.

[12] Government of India Ministry of Personnel, Public GrievancesandPensions Department of Personnel & Training Official Memorandum No.36011/6/2010-Estt.(Res), (Notified on 25-6-2010),

<https://documents.doptcirculars.nic.in/D2/D02adm/36011_6_2010-Estt.(Res).pdf>.

[13] Government of India Ministry of Personnel, Public Grievances and Pensions Department of Personnel &Training Office Memorandum No. 36012/22/93-Estt. (SCT) (Notified on 8-9-1993).

[14] Government of India Ministry of Personnel, Public Grievances and Pensions, Department of Personnel &Training Office Memorandum No. 36033/1/2013-Estt. (Res.) (Notified on13-9-2017).

[15]Janki Prasad Parimoo v. State of J&K, (1973) 1 SCC 420; K.S Jayasree v. State of Kerela, (1976) 3 SCC 730.

[16]1992 Supp (3) SCC 217, para 243.

17Rahul Srivastava, Centre Considering Proposal to Revise Income Criteria for Determining Creamy Layer among OBCs,India Today (3-2-2021), <https://www.indiatoday.in/india/story/centre-considering-proposal-to-revise-income-criteria-for-determining-creamy-layer-among-obcs-1765327-2021-02-03>.

18Only 1% Indians Pay Income Tax, Government Tells Lok Sabha, Business Today, <https://www.businesstoday.in/latest/economy-politics/story/only-1-percent-indians-file-income-tax-govt-tells-lok-sabha-273519-2020-09-21> (last visited on 8-1-2022).

19Only 1% of Taxpayers Earn over Rs 50 Lakhs: Government Data, Times of India, <https://timesofindia.indiatimes.com/business/india-business/people-earning-less-than-2-5-lakh-constitute-57-of-taxpayers-govt-data/articleshow/77519141.cms> (last visited on 10-1-2022).

20Statistical Appendix: Economic Survey 2020-21, <https://www.indiabudget.gov.in/economicsurvey/doc/Statistical-Appendix-in-English.pdf> (last visited on19-1-2022).

21Government of India, Ministry of Finance Department of Economic Affairs Economic Division, Economic Survey 2020-21, Vol. 1, Ch. 4, Inequality and Growth: Conflict or Convergence, 121-149,

<https://www.indiabudget.gov.in/economicsurvey/doc/echapter>.

22RBI Handbook of Statistics on Indian States Report, <https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/16T_241121E38C1EC7A0CE444BB1D875B6CBAC913B.PDF > (last visited 8-1-2022).

23Government of India : Report of the Backward Classes Commission (Mandal Commission Report), Part 1, Vol. I, p. 56.

24(2021) 8 SCC 1.

25Indra Sawhney v. Union of India, 1992 Supp (3) SCC 217.

261992 Supp (3) SCC 217, 735.

27JaishriLaxmanrao Patil v. Chief Minister, (2021) 8 SCC 1, 247.

281992 Supp (3) SCC 217.

291992 Supp (3) SCC 217.

30Jaishri Laxmanrao Patil v. Chief Minister, (2021) 8 SCC 1, 247, para 475.

311992 Supp (3) SCC 217.

32Jaishri Laxmanrao Patil v. Chief Minister, (2021) 8 SCC 1, 254, para 493.

33V.V.Saminathan v. Govt. of T.N., 2021 SCC OnLine Mad 5646.

34(2021) 8 SCC 1, 245, para 466.

35(2006) 8 SCC 212.

36Jaishri Laxmanrao Patil v. Chief Minister, (2021) 8 SCC 1.

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