Creamy layer concept  

• In the 1992 Indra Sawhney judgment, the supreme court upheld the government’s move to give 27% reservation to Other Backward Classes (based on the Mandal Commission report).
• The apex court also introduced the concept of creamy layer and held that the creamy layer (highly advanced socially as well as economically and educationally) must be excluded from backward classes for the purpose of reservation. The court asked the Central government to fix the norms for income, property and status for identifying the creamy layer.
• In 1993, the creamy layer income ceiling was fixed at ₹1 lakh. It was subsequently increased to ₹2.5 lakh in 2004, ₹4.5 lakh in 2008, ₹6 lakh in 2013, and at ₹8 lakh since 2017.
• The court further held that creamy layer principle is only confined to Other Backward Classes and has no relevance in the case of Scheduled Tribes and Scheduled Castes.
• The Supreme Court also held that reservations in appointments — under Article 16(4) of the Constitution — do not apply to promotions.

The amendments that followed

• Meanwhile, in order to change the effect of the judgment in the Indira Sawhney case, there were some amendments to enable the government to make laws regarding reservation in promotion for SCs and STs.
• The first of these amendments was when the Parliament enacted the Constitution (77th Amendment) Act, 1995, inserting Article 16(4A), thereby enabling the government to make laws providing quota in promotion for SCs and STs.
• Article 16(4B) was also inserted, providing that reserved promotion posts for SCs and STs that remain unfilled can be carried forward to the subsequent year. 
• Another instance was when Article 335 of the Constitution was amended in 2001. While Article 335 specified that reservations have to be balanced with the “maintenance of efficiency”, the 2001 amendment stated that the Article will not apply to the government if it relaxes evaluation standards in matters of promotion.
• ‘Maintenance of efficiency’ is a constitutional limitation on the discretion of the government in making reservations in promotion for SCs and STs.

1. Nagaraj vs Union of India (2006)

• These amendments led to the 2006 Supreme Court judgment in M. Nagaraj vs Union of India, where a five-judge bench approved Parliament’s decision to extend reservations for SCs and STs to include promotions with three conditions.
  • It required the state to provide proof for the backwardness of the class benefitting from the reservation,
  • Its inadequate representation in the position/service for which reservation in promotion is to be granted and
  • To show how reservations in promotions would further administrative efficiency
• The judgment also held that the creamy layer within SC/STs will be excluded from the benefits of reservation in promotion policies.

Jarnail Singh vs Lachhmi Narain Gupta (2018)

• The M. Nagaraj case judgment was challenged in the Jarnail Singh case.
• In this judgement, a five-judge Bench of the Supreme Court upheld the applicability of creamy layer to affluent SCs and STs reasoning that the creamy layer principle was based on the right to equality. 
• However, the court delinked the need to provide proof for the backwardness (one of the three conditions mandated in M. Nagaraj judgement) in giving reservation to SC/ST communities.

Why in News?

• The Supreme Court has held that economic criterion cannot be the sole basis for deciding the creamy layer from among backward classes for the purpose of excluding it from the purview of providing reservation.
• The court has quashed a Haryana government notification of August 17, 2016, which specified the criteria for exclusion of creamy layer within the backward classes.
• The court said the notification is in flagrant violation of the directions issued by the apex court in the Indra Sawhney case which laid down the criteria for identifying creamy layer.
• In the Indira Sawhney case, also known as the Mandal Commission case, the top court, while calling upon state governments to identify creamy layer amongst the backward classes and exclude them from the purview of reservation, also held that “the basis of exclusion of creamy layer cannot be merely economic”.
• According to the notification issued in pursuance of the powers under Section 5(2) of the Haryana Backward Classes (Reservation in Services and Admission in Educational Institutions) Act, 2016, children of those with gross annual income of up to Rs 3 lakh shall be the first to get the benefit of reservation in services and admission in educational institutions. The remaining quota shall go to those from the backward classes who earn more than Rs 3 lakh but up to Rs 6 lakh per annum. The sections of backward classes earning above Rs 6 lakh per annum were to be considered as creamy layer.
• The state government said the sub-classification amongst the backward classes is to ensure that people with lower income amongst backward classes get the benefit of reservation as they need a helping hand more than the others in the higher income bracket.
• But the court pointed out that Section 5(2) of the 2016 Act “clearly provides that social, economic and other factors have to be taken into account for the purpose of determining and excluding” the creamy layer within a backward class. 

Articles related to the news

• Article 16(4A) – State can make any provision for reservation in matters of promotion if SC/STs are not adequately represented in the services in the state.
• Article 16(4B) provides that reserved promotion posts for SCs and STs that remain unfilled can be carried forward to the subsequent year.
• Article 335- The claims of the members of the Scheduled Castes and Scheduled Tribes shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services and posts in connection with the affairs of the Union or of a State.

Reference

1. https://www.thehindu.com/news/national/basis-of-exclusion-of-creamy-layer-cant-be-merely-economic-supreme-court/article36083746.ece