The government of India classifies its underdeveloped population into three broad groups – Scheduled Castes (SC’s), Scheduled Tribes (ST’s), and Other Backward Classes (OBC’s).  This classification helps the government formulate policies for targeted socioeconomic development. It is estimated that OBC’s comprise around 41% of the total population. While backward classes are generally understood to be those communities that are socially, economically, and educationally disadvantaged, there is no set definition for what constitutes an OBC. The Constitution of India, though it mentions backward classes, doesn’t spell out specific criteria. The government defines backward classes as those that are “notified as socially and educationally Backward Classes by the State Governments or those that may be notified as such by the Central Government from time to time.” With the establishment of reservation for OBC’s in 1990, it became even more important to identify OBC’s as such. The National Commission for Backward Classes (NCBC/the Commission) is an independent, statutory body established in 1993 to address this issue. Functioning under the semi-administrative and financial control of the Ministry of Social Justice and Empowerment (MSJE), it examines requests for inclusion into the central OBC list, and also has the power to exclude communities from this list. As its decisions are ordinarily binding on the central government, the Commission holds great sway over the list.

The genesis of NCBC can be traced back to the Mandal Commission report. Article 340 of the 1949 Constitution permits the President of India to appoint a commission to examine the conditions of the socially and educationally backward classes. In accordance with this mandate, the Second Backward Classes Commission was appointed in January 1979 under the leadership of Member of Parliament (MP) B.P. Mandal (the commission subsequently is called the Mandal Commission). Among other functions, the Mandal Commission was charged with establishing criteria for defining socially and educationally backward classes as well as recommending measures to advance the interests of these backward classes. The report, published in 1980, recommended a 27% reservation for OBC’s, in addition to the already existing reservation for SC’s and ST’s.

Over a decade later, in August 1990, then Prime Minister V.P. Singh announced the government’s decision to introduce the 27% reservation for OBC’s. An Office Memorandum (OM) formalized this decision by making available 27% of direct recruitment vacancies in the central government, Public Sector Undertakings (PSU’s), and government financial institutions. However, a number of immediate legal challenges to the OM delayed its implementation. Massive riots erupted across India, especially in college campuses, in opposition to the OM. Recognizing the volatility of the situation; in September 1990 the Supreme Court of India transferred all writ petitions opposing the OM to its jurisdiction.

In November 1992, in the landmark case Indra Sawhney and Others vs. Union of India and Others¸ the Supreme Court held that the “creamy layer,” persons/section of a class more socially advanced than the rest, should be excluded from OBC reservations. The Supreme Court directed the central, state, and union territory governments to establish a permanent body that would monitor and recommend inclusion and exclusion in the central OBC list. In response to the central government enacted the National Commission for Backward Classes Act, 1993 to set up NCBC. The Act came into effect on April 2, 1993.

The OM of August 1990 was enacted in September 1993. In accordance with the Supreme Court judgment, an Expert Committee created by the central government established criteria to identify was constituted the “creamy layer.” A major part of the criteria is the income level. First in December 2003, and again in the later years, the commission has been tasked with reviewing the income level for inclusion in the OBC list.

The commission has a very simple mandate. It is responsible for examining requests for inclusion in the central OBC list. Further it is charged with hearing complaints and opposition pertaining to under-inclusion or over-inclusion on the list. Unlike other national commissions of the sort (Commissions for SC, ST, women and minorities), NCBC’s advice is binding to the central government. In other words, the commission holds the keys to the central OBC list.

As of March 2008, the most recent data available, NCBC has looked into almost 1,200 communities for inclusion into and exclusion from the OBC. Of these, more than 700 were for inclusion and over 400 for exclusion. It is important to note here that the commission does not launch independent investigations into OBC status. Rather, requests must be made to the commission. For this purpose, the commission holds regular public hearings. The commission does proactively review income limit for the creamy layer. NCBC’s December 2003 review raised the annual income level from Rs. 1 lakh (~$1,800) to Rs. 2.5 lakhs (~$4500).  A later review increased this to Rs. 4.5 lakhs ($8,100) in 2008. A recent NCBC proposal seeks to raise this limit further to Rs. 9 lakhs (~$16,200) for rural residents and Rs. 12 lakhs (~$21,700). The commission retains the powers of a civil court. In particular it can summon and enforce the attendance of any individual and to examine him or her under oath. It can further require the discovery and production of any document, receive evidence on affidavits filed, requisition documents or public records, and issue commissions to examine documents and witnesses. In 2011, the commission was also given the power to re-examine cases that it had previously rejected. It was under this legal backing that it launched a “social and cultural” study to examine the inclusion of Jats in the OBC community.

Based in New Delhi, the commission is headed by the chairperson and includes three members and a member-secretary. The commission functions under two wings: Administrative and Research. The bulk of the work is carried out by the Research Wing, which includes research officers and research investigators. With between 32%-41% of India’s 1.2 billion people thought to be OBCs, the commission appears to heavily understaffed with just 54 sanctioned posts. The Research Wing only includes two research officers and 4 research investigators.

Budget allocation for the commission comes through Grant-in-Aid disbursed by MSJE. This means that in and of itself the commission does not have a plan budget. Budget accounts in the Office of the Chief Controller of Account at MSJE do not provide a breakdown but only list the amount given to the commission. However taking into account that the commission does not operate any schemes or programs, and that most of its work is office based, it can be concluded that the dominant portion of the budget goes toward paying the salaries of its staff. Other major costs would be maintenance and operation of the office. Minor costs include travel and public hearings (including advertisement).

Minority Sub-Quota within the 27% OBC Quota

While the commission for the most part has managed to avoid any scandals or controversies, the issues surrounding its work are emotive and susceptible to political maneuvering. This has the effect of sometime dragging the commission into a politically charged environment. In May 2012, the central government decided to carve out a 4.5% sub-quota for minorities within the 27% OBC reservation in central educational entities like IIT, IIM, and other prestigious schools. The Andhra Pradesh High Court (APHC) refused to allow this to go forward and struck down the central government’s order. When challenged in the Supreme Court, the Supreme Court sided with APHC and chided the central government for creating this sub-quota. In its refusal to allow the order to move forward, APHC cited religious discrimination as well as “constitutional illegalities.”

The central government had created the sub-quota without consulting NCBC. In doing so, the government “violated a major procedural safeguard.” Any modifications to the central OBC list must happen only after consulting the NCBC. While the government maintained that such consultation is only required for adding or removing new communities to the list, critics of the government’s order maintain that as the expert body on backward castes, NCBC “would have examined the claims of Other Backward Classes vis-à-vis the minority backward classes.” Further, the seemingly arbitrary 4.5% has no real basis in actual numbers and was based on contradictory methodologies. Additionally the Supreme Court specifically asked why the government had not consulted the commission since all communities on the OBC list are educationally and socially backward.

Andhra HC's Verdict May Hit Plans for Muslim Quota in Schools (by Subodh Ghildiyal, Times of India)

Supreme Court Refuses To Stay Andhra HC OBC Sub-Quota Verdict Again (Economic Times)

HC Scraps Minority Sub-Quota in OBC, Centre to Appeal (Indian Express)

Sub-Quota for Backward Minorities: Centre Set to Challenge HC’s Order (Economic Times)

What Is the Basis for Minority Quota, Asks Supreme Court (The Hindu)

Opinion: Lessons on How Not to Pitch a Quota (by K. Vivek Reddy, The Hindu)

Grant NCBC Constitutional Status

The NCBC currently performs a very limited role, that of overseeing inclusion and exclusion in the central OBC list. While it is an important role, the issues facing OBC’s in India require a coordinated central effort to address them. The commission’s role ought to be expanded along the lines of the National Commissions for SC, ST, minorities, and women. NCBC should be more involved in the overall effort to ensure OBC welfare. The plethora of programs designed to help OBC’s are targets of corruption and politicization. As a result, the welfare of OBC communities takes a backseat to political gain. A government panel in August 2012 found that NCBC should be tasked with monitoring the implementation of the programs and monies, and should be given enough power to hold erring parties responsible similar to National Commission for Scheduled Castes and National Commission for Scheduled Tribes. This requires giving it civil court powers as well as expanded legislative backing. Further, ministries, departments, and other entities of the central government should be mandated to consult with NCBC before adopting legislation affecting OBC’s, as is the case with the aforementioned commissions. The Commission harbors significant potential to positively affect OBC policies and welfare, and the government should use the opportunity to do so.  

Panel for Constitutional Status to Backward Commission (Outlook India)

Creamy Layer Income Level

One of the most fundamental criteria for OBC inclusion and exclusion, and one that prevents the creamy layer from obtaining OBC reservation benefits, is an individual’s income level. The Supreme Court mandated that an income review be conducted every three years to adjust for changing economic and social conditions. The last review, in September 2008, raised the income level to Rs. 4.5 lakhs ($8,100). In September 2011, the commission proposed an increase in the ceiling level citing inflation and lack of social progress among OBC’s. The government, however, while adhering to an increase, rejected the commission’s number and instead put forth its own estimate, one lower than that of the commission. This number was rejected in the parliament and the issue is now being debated.

The Commission’s Preference

In the latest review, NCBC proposed a drastic increase of the income ceiling and different levels for rural and urban dwellers. It argued that the rural ceiling should be doubled to Rs. 9 lakhs (~$16,250) and the urban ceiling almost tripled to Rs. 12 lakhs (~$21,700). While recognizing that the numbers are quite high compared to the Indian GDP per capita of about $3,700, the commission pointed to the abysmally low numbers of OBC’s in central services to highlight that financial and social progress are different. It argued that the “unrealistic income bar” has kept OBC candidates away from reservation benefits. Further, Justice M.N. Rao, chairperson of NCBC, argued that economic advancement does not necessarily lead to or determine social advancement. Pointing to Supreme Court ruling on the creamy layer issue, Rao argued that the “basis of exclusion (from quotas) could be economic only if financial advancement was high enough to translate into social progress.” The commission also pointed out high inflation as another reason for doubling and tripling the current ceiling.

Will ‘Creamy Layer’ Ceiling Be Raised? (by Mukesh Rajan, Asian Age)

Double Economic Ceiling on OBC Creamy Layer: Panel (by Kumar Shakti Shekhar, The Pioneer)

Cutoff for OBC ‘Creamy Layer’ May Be Raised to Rs 7 Lakh/Year (by Subodh Ghildiyal, Times Of India)

The Central Government’s Preference

The central government introduced a Rs. 6 lakhs (~$11,000) ceiling in the parliament in June 2012 that was quickly defeated by the pro-OBC faction in the Congress party. Not only was the government’s offer lower than the one proposed by the commission, it also advocated a single ceiling for both rural and urban populations. The government, for its part, tried to reach a compromise with its Rs. 6 lakhs ceiling. It wanted to increase the level for both political and development reasons. However it simultaneously wanted to ensure that the level did not get so high that the purpose of the creamy layer was distorted. It further wanted to contain or prevent any negative side effects (rioting, demonstrations, etc.) that could emanate from this sensitive issue.

Centre Mulls ‘Creamy Layer’ Cut-Off Hike (by Basant Kumar Mohanty, The Telegram)

Congress OBC Lobby Blocks Govt Move to Raise Bar for 'Creamy Layer' Reservations (by Subodh Ghildiyal, Times Of India)

Proposal for Raising Income Ceiling of OBC Creamy Layer Deferred (Economic Times)

S. Ratnavel Pandian

Justice S. Ratnavel Pandian, a former Supreme Court of India Judge, served as the 5th chairperson of NCBC, from August 2006- August 2009. Justice Pandian is a graduate of the St. Xavier’s College in Palayamkottai and Madras Law College. From 1954 to 1971, he served as trial and appellate advocate. He was then appointed as the State Public Prosecutor in the Madras High Court and later promoted to a Judge in 1974. His also served for short periods as the Advocate General and the Government Pleader. For ten months in 1988, he served as the acting Chief Justice of Madras High Court before being appointed as judge of the Supreme Court of India in December 1988. He retired from this position in March 1994.

In 2011, Justice Pandian was caught in a political scandal when it was alleged that he had accepted a bribe to overturn a High Court verdict concerning liquor licenses. A Congress MP from Kerala, K Sudhakaran alleged that a former Supreme Court Judge had received two payments totaling Rs. 36 lakhs (~$66,000) to dismiss a Kerala High Court ban. A bar owner named Pandian as the judge. For his part, Pandian strongly denied all allegations of wrongdoing, calling them “totally baseless, false, and very mischievous.”