For many, the Economic Advisory Council to the Prime Minister (EAC-PM)’s “Report on State of Inequality in India” would have come as a surprise for stating that an Indian earning ₹3 lakh a year, or ₹25,000 a month, would fall in “top 10%” of wage earners in the country. The basis for this claim is the PLFS of 2019-20 — which is meant for tracking the state of employment rather than family income.

Nevertheless, that is the harsh reality of the wannabe economic superpower and the fastest growing major economy in FY22.

Now consider this.

To qualify for the 10% quota (in higher education and jobs) for economically weaker sections (EWS) among upper castes, the cut-off “family income” is ₹8 lakh per annum. That is, a monthly income of ₹66,666. Going by the EAC-PM data, this would mean far more than 90% Indian families would automatically qualify for the EWS quota, since ₹66,666 is 2.6 times ₹25,000. The number could very well be 95-99% families, as we will soon find out, in which cases several questions about the rationality of this quota and the quota system in general arise.

But before looking at those questions here is another cause of concern.

The Centre and some states have already started implementing the EWS quota even though both its constitutionality and the rationale of high-income cut-off are sub-judice and pending before the Supreme Court.

10% EWS quota in operation

The Centre began implementing the EWS quota immediately after the Constitution was amended in January 2019 to provide for it — ahead of the 2019 general elections. The qualifying income threshold (there are asset criteria too but those are not contentious) was notified later that month by the Department of Personnel and Training (DoPT).

For example, the Railway Recruitment Board (RRB) set aside 10% EWS quota in February 2019, while notifying recruitments for over 35,000 non-technical posts. This recruitment process was a long drawn and contentious one, eventually provoking job seekers to attack the Railways’ properties in Uttar Pradesh and Bihar in January 2022. Following this the recruitment process was put on hold.

In April 2022, the RRB re-notified the recruitment to these posts. It again set aside 10% EWS quota.

More recently, on May 17, 2022, the DoPT issued a notification earmarking the EWS quota for recruitment of head constables in the Delhi Police. Of the 559 vacancies, 56 have been marked for EWS categories. The recruitment will be carried out by the Staff Selection Commission (SSC).

There are no comprehensive data on the actual recruitments made under the EWS quota. In December 2021, the Centre told the Lok Sabha that it had recruited 84 people under this head.

Last year, Telangana issued guidelines for the EWS quota in government jobs and higher education. The Andhra Pradesh Public Service Commission (APPSC) soon thereafter declared that it would be providing the EWS quota for all appointments in the state government.

None seems to care about the pending adjudication before the Supreme Court, which, in turn, raises questions about the legal validity of such a move.

The constitutional validity petitions were referred to a five-member bench of the court in August 2020 but nothing more has been heard of it. The income criterion is being heard by another bench for a long time; the next hearing is scheduled for July 2022.

How many families qualify for EWS quota?

When the EWS quota was brought in 2019, the PLFS of 2019-20 — on the basis of which the EAC-PM report said a monthly income of ₹25,000 qualifies one to the top 10% wage earners — wasn’t available. It came in 2021. The only authentic information about the income levels was available in the NSSO’s 2011-12 monthly per capita consumption expenditure (MPCE) survey of households.

This was the same report on the basis of which the finance ministry’s Monthly Economic Report (MER) of April 2022 (released in May) made two absurd claims: (i) “evidence on consumption patterns” suggests that “inflation in India has a lesser impact on low-income strata than on high-income groups”; and (ii) moderation of CPI inflation from 6.2% in FY21 to 5.5% in FY22 led to “redistribution of income”.

Since India doesn’t have household income estimates, MPCE is used as a proxy for it.

According to this report (2011-12 NSSO survey), top 5% of households reported MPCE of ₹4,481 in rural and ₹10,281 in urban areas.

If 5 members of each family in top 5% were earning, the monthly “family” income would be ₹22,405 in rural and ₹51,405 in urban areas — much less than ₹66,666 that was set as the cut-off in early 2019. This would mean the number of families qualifying for the EWS quota would be far more than 95%.

The finance ministry had to rely on this decade-old NSSO data because the Centre junked the 2017-18 one for showing that “real” MPCE had fallen from 2011-12 level — for the first time in 40 years. This indicated poverty was growing. Thus, the Centre didn’t attempt another MPCE even though it did carry out other surveys, like the NHFS-5 of 2019-21, Civil Registration System (CSR) for excess deaths in 2020 and Medical Certification of Cause of Deaths (MCCD) of 2020 — all of which were released earlier this month.

The other data available then was the NABARD’s 2018 All India Rural Financial Inclusion Survey of 2016-17. It showed top 1% of rural households earn ₹48,833 a month — again much less than ₹66,666 and would mean, 99% rural households qualified for the EWS quota.

Several questions arise from all this.

What is the point of the EWS quota when almost the entire country qualifies for it? Does it not defeat the very purpose of quota for SCs, STs and OBCs (positive discrimination) — which is aimed at correcting the “structural inequality” and historical injustices that deprived them of higher education and jobs?

Educational quota allowed by SC

In the meanwhile, the Supreme Court has allowed the EWS quota in higher education.

In January 2022, it vacated a stay imposed on the EWS quota in the NEET PG counselling by the Madras High Court. The latter had pointed at the pending cases before the former to impose a stay. But the former overturned it, saying that the income criterion (₹8 lakh per annum) would be subject to final outcome of the pending petitions.

This begs more questions.

What happens if the income level is found to be irrationally high, without factual basis and then lowered? What would be the fate of candidates who qualify and take admissions by then?

Such possibilities are very real because the apex court has been asking the Centre to provide the rationale for the cut-off of ₹8 lakh income, which the Centre has failed to do until now.

Incidentally, there are assets criteria to qualify for the EWS quota too: (a) 5 acres of agricultural land and above; (b) residential flat of 1,000 square feet and above; (c) residential plot of 100 square yards and above in notified municipalities and; (d) residential plot of 200 square yards and above in non-notified municipalities.

But these are not at the core of the legal challenges to the EWS quota.

Then there is a question of the constitutionality of the EWS for upper castes.

Prima facie, two constitutional issues arise from the EWS quota. One, it violates the 50% capping on reservations that the Supreme Court had put in the famous Indra Sawhney vs Union of India case in 1993 and two, the basis of reservations for SCs, STs and OBCs are not their low income but socio-economic injustices thy suffered which isn’t the case for upper castes.

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