Hike in 'creamy layer' income put off

NEW DELHI: The OBC lobby within Congress blocked the government proposal to enhance 'creamy layer' for reservations to Rs 6 lakh, protesting it was on the lower side. The resistance prompted Prime Minister Manmohan Singh to refer the issue for consultations.

The fresh look may be handed over to a group of ministers (GoM) or be done by social justice ministry that had moved the Cabinet note. Revised every four years, the 'creamy layer' represents the income ceiling that bars OBCs earning higher from availing reservations in jobs and education.

Sources said the Cabinet erupted in dissent when the proposal came up for discussion. The social justice ministry had proposed to hike the 'creamy' layer from an annual salary of Rs 4.5 lakh to
Rs 6 lakh.

Three key cabinet ministers from the Congress stable, led by minister of state in the PMO V Narayanasamy, objected to the meagre hike. They felt the salary bracket to exclude beneficiaries from quota benefits should be pegged at Rs 7 lakh at least.

The higher the salary bar, the more people would be able to tap the quota regime. And OBC satraps have long been resentful of the 'creamy' layer being pegged lower.

What riled them, sources said, was that social justice ministry's "uniform Rs 6 lakh salary bar" contrasted starkly with National Commission for Backward Classes' ( NCBC) recommendation of pegging it at Rs 12 lakh. In fact, it had asked the government to have separate levels for rural (Rs 9 lakh) and urban areas (Rs 12 lakh).

Sources said, besides Narayansamy, corporate affairs minister Veerappa Moily and overseas Indian affairs minister Vyalar Ravi sought a relook at Rs 6 lakh ceiling.

They felt the ceiling did not factor in the currency devaluation/inflation since the last time it was revised to Rs 4.5 lakh, and felt the issue could be seen by National Commission for Backward Classes (NCBC)again. The issues of consultation with states were also raised.

The 'creamy' layer was introduced at Rs 1 lakh in 1993, and was revised to Rs 2.5 lakh in 2004 and Rs 4.5 lakh in 2008.

Contrary to NCBC's activist suggestion of 12 lakh creamy layer, the ministry seems to have been deterred by the opposition that such a huge hike may invite. While there can be judicial challenge, the non-reserved classes feel if the rich among OBCs can get quota, reservations should be extended to poor among upper castes.

The backward panel, headed by M N Rao, argued that affirmative action revolves around social discrimination and economic advancement alone could not determine social advancement. Quoting Supreme Court judgments on the 'creamy' layer, he said the basis of exclusion (from quotas) could be economic only if financial advancement was high enough to translate into social progress.