• This piece explains issues w.r.t SC order on Parental Income as OBC creamy layer criterion with help of media reports and SC order. Income from Salaries or agricultural land excluded for OBC but included for EWS.  

Since January 2026 UGC Circular we shared five articles on Reservations i.e. Reservations in India Explained, Can India become a Casteless Society and UGC Circular, 19 years old student from Jabalpur gets SC relief in Medical College Admission under EWS , SC and MP High Court order on OBC Reservations Explained and Explained – OBC reservations  In December 2024 SC passed an order on Scheduled Sub-quotas

The respected Supreme Court (SC) passed an order on 11/3/26 w.r.t. on Parental Income as OBC creamy layer criterion. As I read more on orders passed w.r.t reservations, admire educational institutions that have to keep track of numerous laws and SC orders. First highlights from media reports that could simplify a complex issue.

1. Hindu 15/3/25: “This will apply to children of parents working in PSUs and private employment. Supreme Court ruled that parental income alone cannot be the sole determinant of whether an OBC candidate falls under the “creamy layer” category.”

The Constitutional view of Equality is mostly applied to Hindus, not to Muslim women who suffer discrimination in inheritance rights.

2. Financial Express: “The office memorandum issued on September 8, 1993 introduced an income and wealth test to identify the creamy layer within OBCs. It clearly stated that salary income and earnings from agricultural land should not be added to income from other sources while calculating the total annual income.” 

3. ThePrint: “The Supreme Court’s latest judgment centered on the constitutional principle that “equals must be treated equally”. It held that if a government clerk’s child is eligible for reservation irrespective of a salary hike, the child of a similarly-placed PSU employee must be treated the same way.”

4. Indian Express: “The court noted that while the OM excluded income from salary and agricultural income from the income/ wealth test for determination of creamy layer status, the letter dated October 14, 2004 directed inclusion of salary income of PSU and private sector employees, and this resulted in hostile discrimination between the wards of government servants and those of PSU/private sector employees.”

“For Armed Forces, officials up to the rank of Lieutenant Colonel can avail the OBC quota, but higher ranks are in the creamy layer.”

“Then Revenue Secretary Ajay Bhushan Pandey, submitted, based on the same 1993 circular, that while computing income for “Creamy Layer among OBCs”, the “income from salaries or agricultural land” was “excluded”, but in cases of EWS, this was “included.” Read 2019 DOPT circular

Income from Salaries or agricultural land excluded for OBC but included for EWS. 

Who will benefit – “Those already working in various services will be allocated higher-rank services. Some of them may get different cadres (in case they are among three All India Services). Some who could not secure a service, will now be allocated one based on their rank revised being an OBC candidate.”

5. DrishtiIAS: “The SC held that creamy layer determination is status-based, not purely income-based, and must consider the parent’s employment status and post category (Group A/B/C/D), not just income.”

6. This IAS Training Institute explained OBC Creamy Layer criteria simply.

This piece attempts to decode the 11/3/ SC order (65 pages).

This SC order is in response to three pleas. First, w.r.t Madras HC order. Second, an OBC student, based on the salary of his father with a private company, was deemed to be in creamy layer. He was treated as General Category (GC) and allocated to Police but wanted to be treated as an OBC and allocated Foreign Service. Third, OBC student whose father worked with a PSU was considered under the Creamy Layer. He wanted to be allocated service based on his OBC status. The Central Administrative Tribunal allowed the three petitions. The Central government went in appeal, first in Madras HC and next as SC.

Who is an OBC (other backward class)?

Section 2 of the 1993 National Commission for Backward Classes (NCBC) Act defines “backward classes” as backward classes of citizens other than the Scheduled Castes and the Scheduled Tribes as may be specified by the Central Government in the lists.” This is a strange definition i.e. based on exclusion of SC and ST.

The Gurjar-Pratihara dynasty produced a number of great kings for e.g. Mihir Bhoja. Gurjars considered OBC today. Read OBC Kings of India

In the most states, OBC includes Muslims and SC Christian converts. 

Submission of Parties Para 7 of SC order – Key points 

P7.2. “The delay in determination of equivalence between PSU employees and Government employees should not result in providing an undue advantage to the respondent candidates who belong to a comparatively higher strata of the OBC category by virtue of their parents’ salary income as this would deny the benefit of reservation to deserving candidates.”

P8.2. “The learned senior counsel further submitted that the implementation of the 1993 OM itself demonstrates that salary and agricultural income are excluded from the income/wealth test.” 

P12. “The Constitution Bench in Indra Sawhney v. Union of India (supra) directed the Union of India to specify appropriate socio-economic criteria for excluding the socially advanced sections – commonly referred to as the Creamy Layer – from the ambit of Other Backward Classes.”

P14.5. “It was also contended that the action of the DoPT in treating the salary of

an employee of a State PSU, irrespective of the post held, as income for determining Non-Creamy Layer status was discriminatory, particularly when, in

the case of employees of the Central Government, State Governments, or Central PSUs, salary income was exempted from such computation.”

Discussions and Findings Para 16 of SC order – Key points

P18. However, as the equivalence of posts in Public Sector Undertakings, banks and other organisations vis-à-vis Government posts had not been formally determined, the DoPT applied the Income /Wealth Test under Category VI of the 1993 OM read with 2004 Letter.”

Constitutional Framework Para 21.2 of SC order – Key points

Refers to Articles 15 (4), 16 (4) and 15 (5).

P21.3 “It is true that social backwardness which results from poverty is likely to be aggravated by considerations of caste to which the poor citizens may belong, but that only shows the relevance of both caste and poverty in determining the backwardness of citizens.”

P21.5 “Reservation policy must balance social justice with broader societal interests.”

Mandal Commission and OBC reservation 21.6 of SC order – Key points

P21.8 “Indira Sawhney case – “This Court upheld the constitutional validity of 27% reservation for OBCs under Article 16(4), but imposed crucial limitations. It held that total reservations ordinarily should not exceed 50%, save in extraordinary circumstances, and most significantly, it mandated the exclusion of the “creamy layer” from among the OBCs. The Court emphasised that backwardness under Article 16(4) is primarily social and that reservation cannot be sustained purely on economic criteria.”

P21.15 “However, the 1993 OM expressly provides that pending evaluation of equivalence or comparability of posts vis-à-vis Government services, the Income / Wealth Test under Category VI alone would apply.” 

P21.16 2004 letter, “It reiterates that income from salaries and income from agricultural land shall not be taken into account while applying the test.”

Para 26 – “The above extract makes it clear that income from salaries, agriculture or other sources cannot be clubbed for the purpose of applying the income/wealth test to determine the creamy layer status of a candidate.” 

P31- “Thus, determination of creamy layer status solely on the basis of income brackets, without reference to the categories of posts and status parameters enunciated in the 1993 OM is clearly unsustainable in law.”

P33 –“At the outset, it must be noted that while caste may be an indicator of historical disadvantage, it cannot be treated as the sole determinant of backwardness.”

Errors if any are unintended. To read SC order in PDF click on PDF  Have highlighted important parts.  As always am happy to stand corrected. Love.

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