Inclusion, not Exclusion, Needed for Reservation Policy

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Different Truths serialises JAMMAI that focuses on the development in India. An initiative of the present government, it’s an ambitious project. We hope that the blueprint on paper matches the political will of the Modi government. Here’s the last part of the six-part article. Anirban reports on the reservation policy.

We bring to you the sixth and final part of the JAMMAI series. Here, we discuss the Index of Economic Strata. Mahatma Gandhi termed the Scheduled Caste (SC), mostly untouchables, as Harijan, while he used the term Girijan (people from the hills) for Scheduled Tribe (ST).

Annual Reservation Index (ARI) is a parameter that shows the percentage at the geographical level, of the smallest unit, such as blocks or panchayats. For example, we are informed different reservation parameters like percentage of SCs, STs, OBCs, and other backward classes, at the block level, the smallest unit at the geographical level. ARI draws the map for the real picture of the action taken on reservation policies at the unit level. Here, we analyse the reservation policies and their solutions, allowing the government to access the ARI across PAN-India location.


Reservation in India is the process of helping a person in the areas of education, scholarship, jobs, and in promotion on the basis of category certificates. Reservation is a form of quota-based affirmative action. Reservation is governed by constitutional laws, statutory laws, and local rules and regulations. Scheduled Castes (SC), Scheduled Tribes (ST) and Other Backward Classes (OBC), and in some states Backward Classes among Muslims under a category called BC (M), are the primary beneficiaries of the reservation policies under the Constitution – with the object of ensuring a level playing field to the socially deprived classes.

The Supreme Court of India, in its November 16, 1992, judgment in the Indra Sawhney case ruled that reservations in promotions are unconstitutional, but allowed its continuation for five years, as a special case. In 1995, the 77th Amendment to the Constitution was made to insert clause (4A) in the Article 16, before the five-year period expired, to continue with reservations for SC/STs in promotions. Clause (4A) was further modified through the 85th Amendment to give the benefit of consequential seniority to SC/ST candidates promoted through reservation quotas.

The 81st Amendment inserted the Clause (4B), in Article 16, to permit the government to treat the backlog of reserved vacancies, as a separate and distinct group, to which the limit of 50 per cent ceiling on reservation might not apply. The 82nd Amendment inserted a provision in Article 335 to enable the states to give concessions to SC/ST candidates in promotion.

Analysis of the Reservation System

At the first glance, it may seem surprising that SC and ST reservation has different effects on poverty. However, given that SCs are groups with low social and ritual standing, while STs are distinguished by their tribal culture and physical isolation, we are able to understand why the effects are different.

  •  First, the geographic concentration and isolation of STs may allow public resources to be aimed directly to them without difficulty. This is in contrast to SCs, who are distributed evenly throughout the state and rarely represent a majority in local communities. However, we test this hypothesis using an isolation index, which measures the probability that the average minority in any given state will meet another minority. We do not find evidence that poverty reduction increases when minorities are more geographically concentrated.
  • Second, we explore the fact that STs tend to live in less diverse communities, while the SCs tend to integrate more. The less diverse ST communities may provide a better opportunity for targeted policies to reduce poverty. By looking at the effect of political reservation, on the basis of caste fragmentation, we find that the effect of having more SC politicians on poverty is lower when there is a more diverse community of castes. The same is not true of ST politicians, though this is not surprising, as they are not part of the Hindu caste system, and therefore, are not affected by caste fragmentation.
  • Lastly, we examine the effect of STs having more dedicated support for the Congress Party. The Congress Party had a ‘poverty removal’ stance from 1971, when Indira Gandhi campaigned for the office of the prime minister under the slogan ‘Garibi Hatao’ (abolish poverty). Given this policy stance and the loyal support from STs, this seems a natural reason for the large effect of ST reservation on poverty. Using measures of support for the Congress Party based on the share of reserved seats won by the Congress Party in the lower Parliament (Lok Sabha), we find that ST reservation is more successful in reducing poverty when there is strong support for the Congress Party.

Further, we explore the effects of the 73rd and 74th Constitutional Amendments, which grant representation for minorities in local government, beginning in 1993. In line with our previous results, we find that SC reservation has no effect on poverty before or after 1993. ST reservation, however, led to larger decline in rural poverty following the 1993 Amendments. Thus the 73rd Amendment, in particular, which implied a decentralisation of power and required local minority representation in rural areas, increased the ability of ST reservation to reduce poverty.


Positive Results and Unintended Ones

Overall, this research is the first to quantify the impact of an affirmative action policy on poverty and one of the few to estimate the overall impact. We find that in the period 1960-2000, SC political reservation had no impact on poverty, while ST reservation decreased both the level and intensity of poverty. The positive impact of ST reservations on not only minorities, but the poor, in general, is in contrast to the typical belief that affirmative action policies only benefit individuals at the top. It is also significant that a similar policy, SC’s political reservation has no impact on poverty. This implies that broad affirmative action policies may result in unintended consequences, and each situation should be examined thoroughly, based on specific circumstances.

A Solution

One unique solution might be ensuring that reservations are based on economic criteria, instead of deciding it on the basis of birth alone. There is a need to shift reservation from the social (caste basis) to the economic criteria. A poor Brahmin and a poor Dalit face similar hardships, economically, though the latter has to bear the brunt of social exclusions too. Let us understand this solution in a greater detail:

Reservation can be based on these three parameters:

  • SC, ST, OBC, General or Caste Index
  • Economic Zone Index
  • Household Health Index

Caste Index is a parameter that determines the value of a person based on his birth, or caste alone. Economic Zone Index is a parameter that is determined by the economic, geographical pocket of the person, determined by his place of origin in the Aadhaar Card. Household Health Index is qualified by the annual income of the family.

To quantify this parameters, we have to assess the reservation index based on these above parameters by numerically quantifying a multiplier effect with each of these reservation made. Let us assume that the SC entry earns 2 points in reservation, a ST entry earns 1.75 points in the reservation, an OBC entry earns 1.50 in reservation, and a general entry is at 1.25 for the reservation index. Here each entry has a multiplier effect.

Let the economic zones earn 2, 3, and 4 in the ranks of decreasing order of priority of the zones, which is a multiplier effect of the economic zone based on the economic development of the states.

Let the Health Index have the points 2, 3, and 4, based on the annual income of a household registered under National Population Register (NPR), with the filtering done through the scheme of Direct Benefit Transfer (DBT). Those who have a household income of more than Rs. 20 lakhs cannot take the advantage of DBT and cannot be targeted for reservation based on these multiplier effects. Please note that DBT scheme is only for those who are in the age group of 10-35 and not just senior citizens. So essentially, we have the following table for the reservation index:

Here, we see that for a 35 per cent slab of flat reservation, we have the above chart. The rest goes to the general candidates, including the creamy layer within the reserved categories. This is a reservation chart within the reservation system. Please note that the 35 per cent reservation is actually a figurative number. The actual slab might be 15-35 per cent, depending on the ARI.

There are basically three groups SCs, STs and OBCs, which have a 35 per cent slab of flat reservation, each having a weight attached to the caste index. Let there be an economic zone 1, 2 and 3, with zone 1 being more progressive than zone 2, & with a multiplier effect as 2, 3, 4 determined by various development indicators of that geographical pocket as a contributor to the whole economy or Indian economy. Similarly, the household income may have a Household Health Index 1, 2 & 3 with Health Index 1 being a household having an annual income of 10-20 lakhs, Household Health Index 2 with an income of 5-10 lakhs, while lastly, Household Health Index 3 has an annual income of less than 5 lakhs. Any household having a salary of more than 20 lakhs per annum is not taken into consideration for reservation. So for three types of reservation groups, three types of economic zone, and three types of Health indices, we have nine possible percentage of reservation within a flat slab of 35 per cent reservation, shown in the table above.

Here are some more points that need mention:

  1.  Socio-economic based reservation, rather than the caste alone may be appreciated more. The slab can be determined after the socio-economic census. We may compile results from the socio-economic census.
  2. Can we forfeit reservation after an income slab is reached? Let us say, if we have an annual slab income of more than 20 lakhs per annum consistently for three years, we will not be eligible for reservation post.
  3. May the private sector get 15 per cent of the reserved candidates in their company, based on physical disability, and other criteria for SCs, STs and OBCs for selection, in specific cases?
  4.  The government may fill the vacancies for general and other candidates, once there are vacant posts after filling up in reserved candidates. Some of the quota based seats, which are not filled, may go to the general candidates as forward auction, which means that the seats are actually officially reserved by general candidates who might replenish some official amount as a part of development plan to the institution, like a donation- but as a white money only.
  5. May we start charity at home please? We may have a separate soft-skill and communication classes for the socially disadvantaged students in a class or school or college, as a part of the regular curriculum.
  6.  May we have reservation from the states as well? Especially, the socio-economic indicators may allow reservation from disadvantaged states as well as a part of filling the seats which are not filled by reservation.
  7. May we have tax breaks for people from the reserved category for the first and second generation taking the benefits of reservation, so that a threshold asset base is achieved?
  8. May we have economic and tax benefits for social entrepreneurship taken by persons in the reserved category? The GoI help may us with tax breaks and other incentives by persons in this entrepreneurial category.
  9. Similarly, we may have the government, NGOs and groups helping a sub-group for a longer period of time to help the underprivileged groups, as in Manthan.
  10. We may set an example at the start by letting go reservations off the chart, when ARI seems positive after a period of time. Let us say, 30 years from now.

However, here are a few positions for which reservations may not apply:

  • Constitutional Posts: The sons and daughters of the President of India, the Vice-Presidentof India, Judges of the Supreme Court, the High Court’s chairman, the members of Union Public Service Commission, members of the State Public Service Commission, Chief Election Commissioner, Comptroller Auditor-General of India or any person holding positions of a constitutional nature.
  • Service Category: Those who are considered Group ‘A’/Class I officers of the All India Central and State Services (Direct Recruits) or those who are considered Group ‘B’/ Class II officers of the Central and State Services (Direct Recruitment) or those who are employees in the Public Sector- Those who have parent(s) that are Class I or Class II officers, or both parents are Class I or Class II officers but one of them dies or suffers permanent in capacitation. The criteria used for sons and daughters of Group A and B are the same for the employees of the Public sector.
  • Armed forces including Paramilitary Forces (persons holding civil posts are not included: The sons and daughters of parents either or both of whom is or are in the rank of colonel and above in the army or in equivalent posts in the Navy, the Air Force, and the Paramilitary Force. But that will be true only when:
  1. “the wife of an armed forces officer is herself in the armed forces (i.e., the category under consideration) the rule of exclusion will apply only when she herself has reached the rank of Colonel”
  2. “the service ranks below Colonel of husband and wife shall not be clubbed together”, and
  3. “if the wife of an officer in the armed forces is in civil employment, this will not be taken into account for applying the rule of exclusion unless she falls in the service category under item No. II in which case the criteria and conditions.”
  • Professional class and those engaged in Trade and Industry: If a person has a high paying job such as physician, lawyer, chartered accountant, income tax consultant, financial or management consultant, dental surgeon, engineer, architect, computer specialist, film artist or other film professional, author, playwright, sportsperson, sports professional, media professional or any other vocations of like status. If the husband holds one of the above jobs and the wife doesn’t then the husband’s income will be taken into consideration and if the wife holds one of the above jobs then the wife’s income will be taken into consideration. The income of the family as a whole will be taken into account because the whole point of the reservation system is to raise the social status of the people that belong to the SC’s, ST’s and OBCs and if a family’s income is already high it is considered that it raises their social status as well.
  • Property owners in agricultural, plantations (coffee, tea, rubber etc.), vacant land and/or buildings in urban areas: Sons and daughters of those who have irrigated land area which is equal to or more than 85 per cent of the statutory ceiling area will be excluded from reservation. They would only be under reservation if the land is exclusively non-irrigated. Those with vacant buildings can use them for residential, industrial or commercial purposes; hence they are not covered under reservations.
  • Creamy layer: Son(s)/daughter(s) of those who earn 20 lakh or more annually for three consecutive years are excluded from reservation.


Reservation is working in the opposite direction, as its main goal is demarcating the society further, and dividing it. It is being used to uplift one society at the cost of another, which is unfair. Merit should mean equal opportunities and not quota for the privileged ones. It is the mind, education and ability that bring changes in life.

Whether to have a reservation/ quota system is still a debatable question in India. Reservation has been made to bring the under privileged class at par with the economically benefited classes. There are numerous reservations for women, physically challenged, economically backward classes, scheduled castes, and scheduled tribes and so on. It has started with a very good objective to bring people at a common place, but unfortunately the quota system has been misused for various reasons. People have also avoided proper scrutiny to get themselves a quota, based on the false documents. It is high time that we challenge these quota system policies, and bring about a change in the policies those benefits all the citizens of India. If India needs to grow, we need a good amount of change in the quota system.

Anirban Kar is a technology and business consultant, who has earned his education degree in two continents, the USA and from India. His work started from 2003 in TCS, and comprised
of various clients ranging across geographies. His area of interest is business modeling,
enterprise architecture and investment analysis.