The Centre has asked the Supreme Court to refer to a seven-judge Bench the question whether the creamy layer concept should apply or not to the Scheduled Castes/Scheduled Tribes while providing them reservation in promotions.

• A two-judge bench of the top court is considering a public interest litigation (PIL) filed by the Samta Andolan Samiti that seeks the removal of creamy layer among the SC/STs in job reservations — a matter settled by a nine-judge Constitution Bench long ago and also a matter that has just been settled by a five-judge Constitution Bench.

Background:

What is creamy layer?

• “Creamy layer” concept involves application of a means test or imposition of an income limit, for the purpose of excluding people whose income is above the limit from the backward class.
• This was earlier only applicable for reservations only under the Other Backward Classes quota. 
• Dalits and Adivasis were excluded since it was argued that their backwardness was based purely on untouchability, for which economic improvement was not a remedy.
• The creamy layer concept was first applied in the Indra Sawhney case, or the Mandal case, as the judgment said that the creamy Layer must be identified and excluded from the backward classes to serve the purpose and object of reservation.

Following the SC judgment, the Department of Personnel and Training (DoPT) had laid down categories under the creamy layer in 1993. According to the 1993 order, sons and daughters of Group A/Class I Officers of All India Central and State Services (direct recruits), Group B/Class II Officers of Central and State Services (direct recruits), employees of Public Sector Undertakings etc. and armed forces fall within the creamy layer, and, therefore, they would not be entitled to reservation benefits.  The order also included within the creamy layer sons and daughters of people with a gross annual income of Rs 8 lakh above or possessing wealth above the exemption limit as prescribed under the Wealth Tax Act for a period of three consecutive years.

Origin of creamy layer-Indra Sawhney case

• In 1992 the Court, in its Indra Sawhney judgment, had upheld reservations for OBCs in 1992, but ruled that creamy layer among the backward class of citizens must be excluded “by fixation of proper income, property or status criteria” by the central government.
• Indra Sawhney make it clear that the SC/STs are given job reservations not because they are poor but because they are excluded so creamy layer concept was not applicable for SC-STs.
• Then, between 1995 and 2000, Parliament enacted a series of Constitutional Amendments that legalized reservation in promotion and nullified the effect of the Court’s judgement in Indra Sawhney. 

The Constitution  (77th Amendment) Act, 1995 was passed by parliament, inserting Article 16(4A), which enables the state to make any law regarding reservation in promotion for SCs and STs. The amendment introduced the words “with consequential seniority” after “in matters of promotion” in Article 16(4A). Other amendments followed. Article 16(4B) provides that reserved promotion posts for SCs and STs that remain unfilled can be carried forward to the subsequent year.  Article 16(4B) ensures that the ceiling on the reservation quota – capped at 50% by Indra Sawhney – for these carried forward unfilled posts does not apply to subsequent years. Article 335 mandates that reservations have to be balanced with the ‘maintenance of efficiency’.  The 2001 amendments to it, clarified that the article will not apply to the state relaxing evaluation standards in matters of promotion. Articles 341 and 342: India’s Scheduled Castes and Scheduled Tribes are groups of historically disadvantaged people who have been given express recognition in the Constitution of India. Constitution does not define as to who are the persons who belong to scheduled castes and scheduled tribes.  However, Articles 341 and 342, empower the State Government to recommend for inclusion of a caste or a tribe in the list of Scheduled Castes and Scheduled Tribes.    The Article 46 of the directive principles enjoins the state to take special care in promoting the educational and economic interests of the weaker sections of the society and in particular the scheduled castes and scheduled  tribes and to protect them from social injustice.   The 124th constitution amendment providing a 10% quota for “economically weaker sections” from the general category of the population – primarily upper caste Hindus, but also religious minorities – has already been challenged in the Supreme Court. It faces two laid down by the Supreme Court itself in its landmark 1993 judgment in Indra Sawhney vs Union of India. These are:   That the total number of reserved  seats/places/positions cannot exceed 50% of what is available, and that under the constitutional scheme of reservation, economic backwardness alone could not be a criterion.

• In 2006, the Court responded with its Nagaraj judgement, which applied the creamy layer test to Scheduled Castes and Scheduled Tribes while upholding the constitutional amendments leading to Articles 16(4-A) and 16(4-B),
• The conditions laid by Nagraj judgement made it difficult for the Central and State Governments to grant such reservations.

Salient features of M. Nagaraj v. Union of India case, 2006: The Constitutional Bench in Nagaraj validated the constitutional amendments made by Parliament. The court had held that the state is not bound to make reservations for Scheduled Castes and Scheduled Tribes in promotions in government jobs. But if the government wishes to introduce such quotas, it needs to collect quantifiable data showing the backwardness of these classes, the top court had said.  The order said that if reservation is brought in, it must not breach the 50?iling or “obliterate” the “creamy layer”. The Nagaraj judgement laid down three controlling conditions that the State must meet prior to granting a SC/ST a reservation in promotion.  First, the State must show the backwardness of the class.  Second, it must show that the class is inadequately represented in the position/service for which reservations in promotion will be granted.  Finally, it must show that the reservations are in the interest of administrative efficiency. What is the impact of this verdict? For example take public sector banks. Banks currently provide reservation in promotion up to Scale 5 (deputy general manager). But with the application of the creamy layer concept, this will stop at Scale 1 (probationary officer).  Thus, the judgment will reverse the existing reservations by four levels i.e., instead of going up to Scale 5, reservations will stop at Scale 1 itself.

Salient features of Jarnail Singh & Ors vs. Lacchmi Narain Gupta & Ors case: Various States along with the Centre challenged the Court's 2006 Nagaraj judgment. The petitioners’ maintained that Nagaraj had made it unjustly difficult to grant reservations in promotion. 

• Firstly, the judgment held that the Supreme Court's 2006 Nagaraj judgment does not need reconsideration by a 7-judge Bench.
• It also added that the principle of creamy layer exclusion applies to SC/STs. 
• The Court held that creamy layer exclusion is a principle of equality. Failing to apply the exclusion of creamy layer principle would violate right to equality in two ways. 
  • it held that doing so treats equals differently, namely the general classes and the forward among Backward Classes (SC/ST). 
  • it held that doing so treat unequals the same, namely backward classes and the forward among backward classes.
• The whole object of reservation is to see that backward classes of citizens move forward so that they march hand in hand with other citizens of India on an equal basis. 
• This will not be possible if only the creamy layer within that class bag all the coveted jobs in the public sector and perpetuate themselves, leaving the rest of the class as backward as they always were. 
• No tinkering with Article 341 and 342: It clarified that in applying the creamy layer principle to Scheduled Castes and Scheduled Tribes, the Court does not in any manner tinker with Castes and groups mentioned under Presidential Order.

Debate of creamy layer

Pros of Creamy layer for SC-STs	Cons of creamy layer for SC-STs
The three criteria — backwardness, inadequacy and administrative efficiency — were “compelling reasons to prevent reservation from making an inroad into the right of equal opportunity in public employment.	Missing element of legal certainty: In the verdict in Jarnail Singh, the court cites an ‘admonition’ to itself by a Constitution Bench in the Keshav Mills case in 1965: “It must be the constant endeavour and concern of this court to introduce and maintain an element of certainty and continuity in the interpretation of law in the country.”
Rich snatching away the benefits: It is this lack of percolation of reservation benefits down to the poor and really backward among the SC/ST communities that had led to social unrest, Naxalite movements and perennial poverty.    Over the years, employment in permanent salaried jobs through reservation had limited impact on the overall well-being of SCs as per NSSO data.	OBC criteria can’t be applied to SC-STs: The Supreme Court too relies on using arguments pertinent only in the case of OBCs to decide litigation on SC/ST quotas.   Indra Sawhney case makes it clear that the SC/STs are given job reservations not because they are poor but because they are excluded.    Poor representation: Data from various ministries and departments of central government show that among the total of 84,705 Group A posts, the representation of SC was 11,333, ST was 5,013, OBC 11,016, and others 57,343 as on January 1, 2016
Backwardness has a tendency to perpetuate itself : The Centre's 'Advisory Committee on the revision of the list of Schedule Castes and Schedule Tribes', also known as Lokur Committee, set up in 1965, said that “backwardness has a tendency to perpetuate itself and those who are listed as backward try to remain as such due to various concessions and benefits they derive. Thus, backwardness becomes a vested interest”.	Same logic should be applied for open category: such logic would require the removal of the creamy layer also while recruiting employees in the open category.
Fundamental right to equality: Including creamy layer treats equals differently, namely the general classes and the forward among Backward Classes (SC/ST).	The presence of the creamy layer works as a safety valve: A well-qualified and large SC/ST group having to compete as non-reserved candidates would corner a substantial number of open posts. Theoretically, SC/STs would end up garnering more posts than their proportion in population.
Balance b/w merit and justice: the creamy layer among SC/ST employees helps fulfil the second part of Article 335 that requires maintaining the “efficiency of administration”.	Today’s creamy layer is yesterday’s underprivileged: Given the uneven educational opportunities across the divides of rich-poor and urban-rural, the poor or underprivileged access substandard education. It is mere recognition of the fact that socio-economic progress moves by generations.

Way forward

• The right of the creamy layer among the community to opt out of reservations:  A simple administrative decision to allow SC/ST candidates to compete in the general category can help thousands to leave the space for the less privileged among them.
• The judiciary should accord “an element of certainty and continuity” on the subject.
• Rationalisation of reservation: Along with improving school education outcomes, a more rational model of reservation based on equity and common sense must be envisaged.