Context: Recently ,the government has accepted the report of a three-member panel constituted to revisit the Economical Weaker Section (EWS) criteria.
Background 

• Petitions have been filed in the Supreme Court  challenging the income criteria for the EWS quota in the NEET exam that determines admissions to medical colleges.
• A special committee set up to review the eligibility criteria of 10% reservations for the Economically Weaker Sections (EWS) in government institutes and jobs .

Important Constitutional Provisions regarding Reservations

103rd Amendment) Act

• The Parliament amended the Constitution of India (103rd Amendment) Act, 2019 to provide for a 10% reservation in education and government jobs in India for a section of the General category candidates.
• The amendment introduced economic reservation by amending Articles 15 and 16. It inserted Article 15 (6) and Article 16 (6) in the Constitution to allow reservation for the economically backward in the unreserved category. 
• Article 15(6): Up to 10% of seats may be reserved for EWS for admission in educational institutions. Such reservations will not apply to minority educational institutions.
• Article 16(6): It permits the government to reserve up to 10% of all government posts for the EWS. 

Other Related Articles

• Article 16(1) and 16(2) assure citizens equality of opportunity in employment or appointment to any government office.
• Article 15(1) generally prohibits any discrimination against any citizen on the grounds of religion, caste, sex or place of birth.
• Articles 15(4) and 16(4) state that the equality provisions do not prevent the government from making special provisions in matters of admission to educational institutions or jobs in favour of backward classes, particularly the Scheduled Castes (SCs) and the Scheduled Tribes (STs).
• Article 16(4A) allows reservations to SCs and STs in promotions, as long as the government believes that they are not adequately represented in government services.

Major Points of Panel report 
Annual income limit

• The committee has termed the gross family annual income limit of Rs 8 lakh as ‘just and fair in the present circumstances’ as unlike the similar income criteria for OBC creamy layers reservation, the EWS regime includes income from all sources including agricultural income and salary for the household.
• The EWS' criteria relates to the financial year prior to the year of application whereas the income criterion for the creamy layer in the Other Backward Classes (OBC) category is applicable to gross annual income for three consecutive years.
• The committee concluded that the two sets of criteria are significantly different despite both using the Rs 8 lakh cut-off and that the criteria for the EWS are much more stringent than those for the OBC creamy layer.

Residential asset criteria

• According to the EWS quota notification of 2019 issued by the Department of Personnel & Training, persons whose family owns or possesses 5 acres of agricultural land or residential plot of 1,000 square feet or a residential plot of 100 square yards in notified municipalities or a plot of 200 square yards and above in areas other than the notified municipalities, will be excluded from being identified as EWS, irrespective of the family income.
• The panel has recommended that the residential asset criteria may altogether be removed, arguing that mere possession of residential house may not correctly reflect the economic condition of the candidate or his family, especially if it is used only as a dwelling unit and not for generating any income.

Other Suggestions 

• It suggested that the recommendations be implemented only from the next admission cycle and not the ongoing one as any sudden change will cause a major disruption across educational institutes and create complications for both beneficiaries and the authorities.
• It has recommended that the existing process - in effect since 2019 - be continued for the current admission cycle
• The panel has further suggested that 'a three-year feedback loop cycle may be used to monitor the actual outcomes of these criteria and then be used to adjust them in future'.
• It has also proposed that data exchange and information technology be used actively to verify income and assets and improve targeting for EWS reservations.

Government Response 

• The government is likely to go with the panel's recommendations and revise its EWS quota guidelines accordingly, if they pass muster at the apex court.

What are the court’s questions about the criteria?

• Reduction within general category: The EWS quota remains a controversy as its critics say it reduces the size of the open category, besides breaching the 50% limit on the total reservation.
• Arbitrariness over income limit: The court has been intrigued by the income limit being fixed at Rs 8 lakh per year. It is the same figure for excluding the ‘creamy layer’ from OBC reservation benefits.
• Socio-economic backwardness: A crucial difference is that those in the general category, to whom the EWS quota is applicable, do not suffer from social or educational backwardness, unlike those classified as the OBC.
• Metropolitan criteria: There are other questions as to whether any exercise was undertaken to derive the exceptions such as why the flat criterion does not differentiate between metropolitan and non-metropolitan areas.
• OBC like criteria: The question the court has raised is that when the OBC category is socially and educationally backward and, therefore, has additional impediments to overcome.
• Not based on relevant data: In line with the Supreme Court’s known position that any reservation or norms for exclusion should be based on relevant data.
• Breaches reservation cap: There is a cap of 50% on the reservation as ruled in the Indira Sawhney Case. The principle of balancing equality ordains reservation.