SYLLABUS

GS-2: Structure, organization and functioning of the Executive and the Judiciary Ministries.

Context: Recently, the Supreme Court of India has ruled that parental income alone cannot be the sole criterion for determining the creamy layer among Other Backward Classes (OBCs).

More on the News

• The case arose from disputes over the verification of OBC Non-Creamy Layer status of candidates who cleared the Civil Services Examination (CSE).
• Several candidates were denied OBC reservation benefits after the Department of Personnel and Training (DoPT) counted parental salary income, especially for parents employed in PSUs, banks, universities and private organisations.
• The Union government relied on a 14 October 2004 clarificatory letter related to the creamy layer criterion.
• Around 100 candidates since CSE 2015 were affected and approached courts after their OBC claims were rejected during verification.

Background of the Dispute

• The dispute emerged due to uncertainty regarding the equivalence between PSU/private sector posts and government service posts.
• In such cases, authorities relied primarily on the income test rather than the status of the parents’ post.
• The 2004 DoPT clarification suggested that salary income could be considered while determining creamy layer status where such equivalence had not been established.
• This interpretation led to the rejection of OBC status for several candidates despite them clearing examinations under the OBC category.

Key Highlights of the Judgment

• The Court held that creamy layer status cannot be determined solely based on parental income.
• It emphasised that the status and category of the parents’ posts are essential factors in determining creamy layer classification.
• The Court noted that the 1993 Office Memorandum (OM) clearly excluded salary and agricultural income from the income/wealth test.
• It ruled that the 2004 clarificatory letter cannot override the framework of the 1993 OM, as a clarification cannot introduce substantive policy changes.
• The Court observed that treating children of PSU or private sector employees differently from those of government employees would result in hostile discrimination.
• Such treatment violates the equality principle under Articles 14, 15 and 16 of the Constitution.
• Authorities have been directed to reconsider the claims of affected candidates within six months, excluding parental salary income from the creamy layer test.
• The Court also permitted the creation of supernumerary posts to accommodate candidates who qualify as non-creamy layer under the clarified criteria.

About the Creamy Layer Concept

• The concept of creamy layer among OBCs was introduced by the Supreme Court in Indra Sawhney v. Union of India (1992).
• The ruling upheld reservations for Other Backward Classes (OBCs) but directed the exclusion of socially and economically advanced sections within the community.
• To implement this principle, the Department of Personnel and Training issued an Office Memorandum on September 8, 1993.
• The criteria primarily rely on the status and position of the parents’ posts, such as:
  • Persons holding constitutional positions
  • Group A/Class I officers of Central or State services
  • Certain Group B/Class II officers promoted to Group A before age 40
  • Senior officers in the Armed Forces
• The OM also introduced a residual income/wealth test for cases where status-based criteria do not apply.
• Under this test, families whose gross annual income from sources other than salary and agricultural land exceeds the prescribed limit for three consecutive years are treated as belonging to the creamy layer.
• The income ceiling was ₹1 lakh in 1993, later revised multiple times, and currently stands at ₹8 lakh per year (since 2017).

Sources:
The Hindu
Indian Express
Live Law