Income Criteria for the Economically Weaker Sections (EWS) in India – Explained, pointwise

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Recently, the Supreme Court raised questions about the basis on which Centre fixed the criteria and income limit for granting reservation to  Economically Weaker Sections (EWS). In response, a three member-committee constituted by the Ministry of Social Justice and Empowerment to examine the income criteria has submitted its report.

The panel has suggested that its recommendations be implemented only from the next admission cycle and not the ongoing one, as any sudden change will cause major disruption across educational institutes and create complications for both beneficiaries and the authorities.

About the SC question and the Committee

The Supreme Court is hearing a number of petitions, including a special leave petition filed by the Centre against a Madras High Court order on EWS and OBC reservation in the all-India quota under the NEET entrance exam for postgraduate medical and dental admissions. Following the petitions, the Supreme Court had stayed counselling for admission until the matter is decided.

Read more: National Entrance cum Eligibility Test(NEET) – Issues and Significance- Explained, pointwise

The Court wants to know whether there was any study done before the Centre prescribed the norms for identifying EWS beneficiaries based on indicators of economic disadvantage. The Court had clarified that it was not examining any policy issue but wanted to determine if constitutional requirements have been complied with.

The Ministry of Social Justice and Empowerment had constituted a three-member panel comprising Ajay Bhushan Pandey, V K Malhotra, and Sanjeev Sanyal. Now the committee has submitted its report.

The government has already accepted the committee’s report. While the government requested an early hearing as counselling for NEET is held up.

Read More: NEET counselling can begin under existing EWS criteria: Supreme Court
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About the Economically Weaker Sections

EWS reservation was granted based on the recommendations of a commission headed by Major General (retd) SR Sinho. The Commission for Economically Backward Classes was constituted in 2005 and submitted its report in July 2010. Based on this, the Cabinet in January 2019 decided to amend the Constitution (103rd Amendment) to provide reservation to EWS.

The 103rd Amendment Act provides for reservation in appointments to posts under the State and in admissions to educational institutions to “economically weaker sections of citizens [EWS]”. This reservation can extend up to 10% of the total seat available.

Salient features of the Act include 1. The Act provides for the reservation of jobs under the Central Government as well as government educational institutions. It is also applicable to admissions to private higher educational institutions, 2. This reservation is “in addition to the existing reservations and subject to a maximum of 10% of the total seats in each category”.

Must read: 103rd Constitutional Amendment presents a more difficult judicial examination than usual
What is the current income criteria fixed for EWS?

The current criteria is,

Source: Indian Express
Read more: Explained: Revisiting definition of EWS
What are the recommendations given by the panel on the eligibility criteria of EWS?
Source: TOI

Firstly, drop the existing criteria on residential asset size. This is because mere possession of a 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.

 However, the panel has backed excluding all candidates with agricultural land over 5 acres.

Secondly, “The current gross annual family income limit for EWS of Rs. 8.00 lakh or less may be retained.” Moreover, income criteria of EWS and OBC cannot be compared as EWS criteria are more stringent than the one for the OBC creamy layer because:

 EWS’s criteria relates to the financial year prior to the year of application, whereas the income criterion for the creamy layer in the OBC category is applicable to gross annual income for three consecutive years.

 In the case of the OBC creamy layer, income from salaries, agriculture and traditional artisanal professions are excluded from the consideration whereas the ₹8 lakh criteria for EWS includes all sources, including farming.

Thirdly, 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.

Fourthly, data exchange and information technology can be used actively to verify income and assets and improve targeting for EWS reservations.

Read more: Supreme Court sets aside Madras High Court remarks on EWS quota
What are the concerns associated with committee recommendations on EWS?

First, The court’s key question remained unanswered: The committee failed to answer, clearly, whether it “would… be arbitrary to provide the same income limit both for the OBC and EWS categories”.

Second, the Criteria for “being economically weak” is less stringent: The committee’s assertion that ₹ 8 lakh corresponds to the “effective income tax exemption limit”. But the only income slab exempt from paying taxes was for those earning below ₹2.5 lakh. Hence, the recommendation bunch up eligible candidates in different income brackets (0-₹2.5 lakh, ₹2.5-₹5 lakh, ₹5-₹8 lakh).

Third, The Committee does not explain why marks cut-offs were even lower in recruitment exams than that of the socially and educationally backward OBCs.

Fourth, the committee failed to provide enough data: The report does not present any data on the estimated number of EWS persons in the population based on the annual family income criterion of ₹8 lakh.

Fifth, unlike the commissions for OBC reservations, there is no study undertaken for EWS reservations. The present report justified EWS criteria, but there was no study undertaken prior to the introduction.

Also read: Maratha Reservation and the Reservation Policy in India – Explained, Pointwise

Sixth, Recommendations based on the infeasible and complex process: Purchasing power across urban/rural regions and per capita income/GDP across States were considered for these recommendations. But these factors differ across the country,

Seventh, Irrational limit: Consumer expenditure surveys such as the 2011-12 NSSO report, Key Indicators of Household Consumer Expenditure shows that a bulk of the population will be eligible for EWS reservations, rendering the limit irrational.

Read more: Income and quotas
What should be done regarding EWS?

The validity of the 103rd Constitution Amendment, through which the EWS quota was introduced in 2019, is still before a Constitution Bench. So, the Court has to adjudicate that case. So, that all the related questions are settled in a holistic way.

The apex court must seek more clarity on the criteria adopted by the Government committee to set the income limit for identifying the EWS sections eligible for reservations.

It is high time that the Indian political class should not continue the tendency of expanding the scope of reservation in pursuit of electoral gains. They should realise that reservation is not the panacea for problems, and they should adhere strictly to the 50% cap, as mentioned in the Indira Sawhney case(1992).

Must read: The Mandal case and Reservation in India – Explained, Pointwise

Reservation is one of the tools against social oppression and injustice against certain classes. However, reservation is just one of the methods for social upliftment. Hence, the government should focus on the quality of education, providing scholarships, funds, coaching and other effective social upliftment measures. Apart from that, the government should create a spirit of entrepreneurship to make Indian youth job-givers instead of job seekers.

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