The Parliamentary Committee on Welfare of Other Backward Classes (OBCs) has reiterated the need to revise the “creamy layer” income ceiling for OBC reservation benefits. It called the revision the “need of the hour”, citing inflation and rising income levels, which have rendered the current ₹8 lakh per annum limit (fixed in 2017) inadequate. The Ministry of Social Justice and Empowerment (MoSJE), however, stated that there is currently no proposal under consideration for a revision.

Understanding the “Creamy Layer” Concept

1. Introduced following the Indra Sawhney v. Union of India (1992) judgment of the Supreme Court, which upheld 27% OBC reservation but excluded the socially advanced among them.
2. The creamy layer criterion is an economic threshold: those above the prescribed annual family income are excluded from OBC reservation benefits.
3. Initially set at ₹1 lakh (1993), it has been revised periodically, ₹2.5 lakh in 2004, ₹4.5 lakh in 2008, ₹6 lakh in 2013, ₹6.5 lakh in 2014, ₹8 lakh in 2017 (last revision)
   1. As per DoPT norms, revision should occur every 3 years.

OBC Reservations in India: Historical Background

Constitutional Foundation

• Article 15(4): Allows the State to make special provisions for the advancement of socially and educationally backward classes (SEBCs), Scheduled Castes (SCs), and Scheduled Tribes (STs).
• Article 16(4): Empowers the State to provide reservation in appointments or posts in favour of any backward class not adequately represented in State services.
• Article 340: Empowers the President to appoint a commission to investigate conditions of backward classes and recommend measures.

Significance of Revising the Creamy Layer Limit

1. Social Justice: Ensures benefits reach those who truly need them, keeping pace with economic changes.
2. Reducing Inequality: Supports more OBC families in accessing education, jobs, and government schemes.
3. Compliance with Policy Guidelines: DoPT’s 1993 order mandates periodic revisions.

Challenges

1. Balancing Reservation Benefits: Avoiding over-expansion that may dilute benefits for the most marginalized.
2. Economic vs. Social Backwardness: Income is only one indicator; social deprivation is harder to quantify.
3. Political Consensus: Reservation policy changes are politically sensitive.

Committee’s Concerns on the Current ₹8 Lakh Threshold

• Erosion by Inflation: Rising basic income levels have reduced the effectiveness of the threshold.

• Exclusion of Needy Segments: Many OBC families in need of reservation benefits are above ₹8 lakh but still economically disadvantaged in terms of education and access to resources.

• Socio-Economic Goals: Wider coverage will help raise the social and educational status of more OBC families.

Way Forward

• Periodic & Transparent Revision: Institutionalize automatic inflation-indexed adjustments.
• Comprehensive Backwardness Index: Incorporate education, occupation, and rural/urban disparities along with income.
• Targeted Scholarships: Expand pre-matric support for lower classes to improve educational pipelines.
• Better Data: Conduct regular socio-economic surveys for evidence-based policy.

The creamy layer provision is a critical filter to ensure reservation benefits reach the truly disadvantaged among OBCs. With inflation and rising income levels, the current ₹8 lakh ceiling may no longer serve its purpose effectively. The Parliamentary Committee’s push for revision aligns with constitutional principles of equality and social justice, but implementation will require careful balancing of inclusivity, efficiency, and fairness.

Mains Practice Questions:

1. “Reservation for backward classes should be based on social and educational backwardness rather than economic criteria alone.” Discuss.
2. The creamy layer in OBC reservation is a safeguard for ensuring equity within equity.’ Comment.

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