Government says ₹8-lakh EWS cap derived after study

Supreme Court questions Centre on the reasoning behind income limit.

January 06, 2022 07:30 pm | Updated January 07, 2022 07:30 am IST - NEW DELHI

NEW DELHI, 09/04/2013: Supreme Court of India in New Delhi on April 10,  2013. 
Photo: S. Subramanium

NEW DELHI, 09/04/2013: Supreme Court of India in New Delhi on April 10, 2013. Photo: S. Subramanium

The Supreme Court on Thursday wondered how the Union government came up with the ₹ 8 lakh annual income limit within just three days of introducing 10% reservation for the economically weaker sections (EWS) of society.

The Constitution (One Hundred and Third) Amendment Act introducing EWS quota came into force on January 14, 2019. On January 17 the same year, the government released an official memorandum (OM) informing that families earning a gross annual income below ₹ 8 lakh would be identified as EWS for benefit of reservation.

“The Amendment came on January 14. On January 17, the OM comes... So the whole process of consultation, discussion, etc, with Social Justice Ministry was completed and everything was done by January 17?” Justice D.Y. Chandrachud asked Solicitor General Tushar Mehta.


Mr. Mehta said the ₹ 8 lakh limit was derived after study. “It was not an unstudied position,” the top law officer maintained.

The Bench, also comprising Justice A.S. Bopanna, then pointed to an affidavit filed by the government in October last, which revealed that the ₹ 8 lakh threshold was “largely based” on the criterion to identify the creamy lawyer in OBC quota.

The court said this earlier position in October was quite contrary to the later conclusions of the government's own expert committee headed by former Finance Secretary Ajay Bhushan Pandey in December.

The committee, formed by the government to review the ₹ 8 lakh limit, in its report on December 31, maintained that the ₹ 8 lakh threshold fixed to identify EWS was not a “mechanical adoption” of the OBC creamy layer cut-off.

Justice Chandrachud remarked, “The review committee seems to be just trying to justify the ₹ 8 lakh limit post facto... They have done their best to justify the ₹ 8 lakh limit”.

Justice Chandrachud, however, moments before rising for the day, said it was in national interest that NEET counselling should continue. “In national interest, counselling has to begin,” he stated.


Lawyers’ concern

The court shared the concern raised by lawyers that the country needed specialist doctors to combat the prolonged public health crisis posed by the pandemic. It reserved the case for orders and allowed lawyers to file their written arguments by January 7.

In his arguments for the Centre, Mr. Mehta asked whether anybody with “common sense” would think ₹ 8 lakh was an “irrational” income limit for determining EWS. He said EWS had “stricter criterion” and considered the gross annual income of the family and not just that of the individual seeking reservation benefits. He referred to the Pandey committee report, which said the ₹ 8 lakh criterion struck a “fine balance” between over-inclusion and inclusion errors.

The report has said, “The figure ensures that most low-income people who are not required to pay income tax are not excluded and are covered in EWS and at the same time it should not be so high that it becomes over-inclusive by including many incomes tax-paying middle- and high-income families into EWS”.


Mr. Mehta said the constitutional term “economically weaker” did not mean those below the poverty line, but people in the low-income groups, who may have small savings, but not enough to reap the benefits of a good higher education in the best universities like others. He denied ₹ 8-lakh criterion was a leaf out of the OBC creamy layer cut-off.

“Firstly, EWS’s criteria relates to the financial year prior to the year of application whereas the income criterion for the creamy layer in OBC category is applicable to gross annual income for three consecutive years. Secondly, in case of OBC creamy layer, income from salaries, agriculture and traditional artisanal professions are excluded from the consideration whereas the Rs. 8 lakh criteria for EWS includes all sources, including farming. So, despite being the same cut-off number, their composition is different and hence, the two cannot be equated,” Mr. Mehta referred to the review committee report’s findings.

Govt rejects accusation

The government rejected the accusation by petitioners, represented by advocate Charu Mathur, that it “changed the rules of the game midway” through the NEET admission process by issuing a notification on July 29 last year announcing 27% quota to OBCs and 10% reservation to EWS in the All India Quota.


Mr. Mehta said the notification came much prior to the date on which NEET was conducted and the commencement of the counselling process.

However, senior advocate Shyam Divan argued that the candidates had registered for the exam in February last year with the particular seat matrix available at that time. The July 29 notification had indeed changed the seat matrix by including further reservation, thus changing the rules of the game unfairly.

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