Counting those who qualify as EWS

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Last Updated04/03/2022

In January 2019, the Government of India (GoI) issued a circular, which guaranteed 10% reservations in civil posts and services of the GoI to the Economically Weaker Sections (EWS) of the society, who were not covered under the reservation scheme for Scheduled Castes (SCs), Scheduled Tribes (STs), and Other Backward Classes (OBC).

However, the Rs 8 lakh cut-off has come under the scrutiny of the Supreme Court (SC).
The Supreme Court has sought clarification from the GoI regarding the basis for the income cutoff.

The PLFS covers all sectors of the economy, agriculture, secondary, and tertiary, and employment status, whether individuals are self-employed, have a regular wage/salaried job, or are casual workers.
It also collects data on earnings based on the CWS. The ultimate stage units of the PLFS were households, where information on employment and unemployment is sought from all family members of the household.
Data is also collected on socio-demographic characteristics of the household, such as the religious and social status of the household, whether it belonged to SC/ST/OBC or the general category.

99% of rural households and 95% of urban households had monthly earnings less than Rs 66,667, which would translate to approximately Rs 8 lakh annually. Moreover, the median household monthly earnings in rural areas were Rs 9,000, which was about seven times less than the earnings cutoff for EWS.
while in urban areas, it was Rs 15,000, which was approximately four times less than the earnings cutoff for the EWS set by the GoI.
However, if we exclude households with zero earnings. In that case, analysis reveals that for non-SC/ST/OBC households, 99% of rural households and 94% of urban households had monthly earnings less than Rs 66,667, which would translate to approximately eight lakh rupees annually.

PLFS data is based on the current weekly status; there is a possibility that the household had positive income at other times of the year but not the week preceding the survey. Therefore, the earnings data is an underestimate.
To overcome this limitation, a second analysis of including only those households with positive earnings was conducted and found that the underlying results did not change significantly; that is, more than 90% of rural and urban non- SC/ST/OBC households had monthly earnings less than the cutoff set by the GoI for EWS income criteria.
The second limitation of the study is the definition of family. The PLFS defines a household as a group of persons who usually stay together and take food from a shared kitchen.

Analysis reveals that more than 90% of rural and urban non–SC/ST/OBC households will meet the EWS criteria.