The basis of exclusion of ‘creamy layer’ cannot be merely economic, a Supreme Court Bench has observed in their judgment, while referring to the court’s Indra Sawhney verdict of 1992.

What was the case?

• The court was hearing a petition challenging some notifications by the Haryana government sub-classifying backward classes solely on economic basis while fixing the criteria for creamy layer.
• The notifications said children of persons having “gross annual income” of up to ?3 lakh annually would get the benefit of reservation in services and admission in educational institutions.
• The remaining quota would go to those from backward families, which earn between?3 lakh and ?6 lakh per annum.
• The sections earning over ?6 lakh annually were considered as ‘creamy layer’ under Section 5 of the 2016 Act.
• The apex court held that the Haryana’s notifications have violated the law declared in the Indra Sawhney judgment by identifying creamy layer only on the basis of income.

Defying Indra Sawhney Verdict (1992)

• The case had declared that ‘creamy layer’ in a backward community should be excluded from reservation so that the more deserving were able to come up.
• Explaining this verdict, court said that such persons were to be treated as ‘creamy layer’ without any further inquiry.

Who else would be excluded from such reservation?

• Likewise, people with sufficient income who were in a position to provide employment to others should also be taken to have reached a higher social status and therefore, should be treated as outside the backward class.
• Similarly, persons from backward classes who had higher agricultural holdings or were receiving income from properties, beyond a prescribed limit, do not deserve the benefit of reservation.

Key takeaways from the Judgement

• The Supreme Court has held that the government cannot deny reservation to a person belonging to a backward community solely on the ground that he or she is rich.
• Social advancement, higher employment in government services, etc, played an equal role in deciding whether such a person belonged to the creamy layer and could be denied quota benefits.
• The court had illustrated that ‘creamy layer’ would include persons from backward classes who occupied posts in higher services like IAS, IPS, and All India Services.
• These persons had reached a higher level of social advancement and economic status,and therefore, were not entitled to be treated as backward.

What is the Creamy Layer?

• Creamy Layer is a concept that sets a threshold within which OBC reservation benefits are applicable.
• While there is a 27% quota for OBCs in government jobs and higher educational institutions, those falling within the “creamy layer” cannot get the benefits of this quota.

Basis of Creamy Layer

• It is based on the recommendation of the Second Backward Classes Commission (Mandal Commission).
• The government in 1990 had notified 27% reservation for Socially and Educationally Backward Classes (SEBCs) in vacancies in civil posts and services that are to be filled on direct recruitment.
• After this was challenged, the Supreme Court in the Indira Sawhney case (1992) upheld 27% reservation for OBCs, subject to exclusion of the creamy layer.

How is it determined?

• Following the order in Indra Sawhney, an expert committee headed by Justice (retired) R N Prasad was constituted for fixing the criteria for determining the creamy layer.
• In 1993, the Department of Personnel and Training (DoPT) listed out various categories of people of certain rank/status/income whose children cannot avail the benefit of OBC reservation.

1. For those not in government, the current threshold is an income of Rs 8 lakh per year.
2. For children of government employees, the threshold is based on their parents’ rank and not income.
3. For instance, an individual is considered to fall within the creamy layer if either of his or her parents is in a constitutional post; if either parent has been directly recruited in Group-A; or if both parents are in Group-B services.
4. If the parents enter Group-A through promotion before the age of 40, their children will be in the creamy layer.
5. Children of a Colonel or higher-ranked officer in the Army, and children of officers of similar ranks in the Navy and Air Force, too, come under the creamy layer.
6. Income from salaries or agricultural land is not clubbed while determining the creamy layer (2004).

Indira Sawhney Case

In the famous Mandal case (Indra Sawhney Case, 1992), the scope and extent of Article 16(4), which provides for reservation of jobs in favor of backward classes, has been examined thoroughly by the Supreme Court.

• Though the Court has rejected the additional reservation of 10% for poorer sections of higher castes, it upheld the constitutional validity of a 27% reservation for the OBCs with certain conditions.
• The advanced sections among the OBCs (the creamy layer) should be excluded from the list of beneficiaries of reservation.
• No reservation in promotions; reservation should be confined to initial appointments only. Any existing reservation in promotions can continue for five years only (i.e., up to 1997).
• The total reserved quota should not exceed 50% except in some extraordinary situations. This rule should be applied every year.
• The ‘carry forward rule’ in case of unfilled (backlog) vacancies is valid. But it should not violate the 50% rule.