The government also ruled out having a re-look at the present reservation system.
Union Finance Minister Arun Jaitley told reporters in New Delhi that the Union cabinet was on Wednesday formally apprised of the decision to hike the limit for central government jobs.
He said Prime Minister Narendra Modi had hinted in Assam recently that the bar defining creamy layer would be raised and the procedure of formally informing the cabinet about the decision was completed on Wednesday.
The ministry of social justice and empowerment had proposed that OBC families which earn more than Rs 8 lakh per year should be classified as 'creamy layer' -- the ceiling which bars members of the other backward classes from availing reservations in employment.
Responding to a question, Jaitley said a proposal to extend the decision to public sector undertakings was under 'active consideration' of the government.
There had been three revisions of the creamy layer bar.
It was fixed at Rs one lakh in 1993 and hiked to Rs 2.5 lakh in 2004 and Rs 4.5 lakh in 2008. The present ceiling of Rs six lakh came into being in 2013.
Jaitley also announced the decision of the cabinet to set up a commission to work out sub-categorisation within other backward classes for a 'more equitable distribution of reservation benefits amongst the OBCs'.
He said 11 states of Andhra Pradesh, Telangana, Puducherry, Karnataka, Haryana, Jharkhand, West Bengal, Bihar, Maharashtra, Tamil Nadu and Jammu region only of Jammu and Kashmir have already carried out sub-categorisation of OBCs.
"There will be more equitable distribution amongst the OBCs themselves (of the benefits)," Jaitley explained.
The proposed commission, to be set up under Article 340 of the Constitution, will submit its report within 12 weeks from the date its chairperson is appointed.
According to a press release issued by the government, the panel will examine the 'extent of inequitable distribution of benefits of reservation among the castes and communities included in the broad category of OBCs, with reference to the OBCs included in the Central list'.
It will also work out the mechanism, criteria, norms and parameters -- in a scientific approach -- for sub-categorisation within such OBCs.
The commission will also undertake an exercise of identifying the respective castes/communities/ sub-castes/ synonyms in the central list of OBCs and classifying them into their respective sub-categories.
Responding to a question, the Finance Minister ruled out having a relook at the reservation system in the country.
Rashtriya Swayamsevak Sangh chief Mohan Bhagwat had in September, 2015 pitched for a review of the reservation policy, contending it has been used for political ends and suggested setting up of an apolitical committee to examine who needs the facility and for how long.
"Neither there is any proposal before the government, nor would there be a proposal (before it in the future)," Jaitley told a press conference on cabinet decisions.
He was asked whether the government will review the reservation system as suggested by Bhagwat.
The Bharatiya Janata Party hopes to boost its standing among backward classes with the government's decision.
Prominent BJP leaders of backward classes hailed the announcement as 'historic' and 'unparallelled', saying these measures addressed two major demands that the OBC group had been pressing for over several years.
"It is an unparallelled step towards empowering backward classes. The average income among them had risen with time and there was an increasing demand to raise the creamy layer bar. The decision will provide reservation benefits to many more people," BJP general secretary Bhupender Yadav said.
He said the government had taken a decision which would help the most deprived among backward classes.
The twin moves are being seen as a balancing act as dominant castes among the OBC have long viewed with suspicion any move at sub-categorising quotas.
In raising the ceiling by over 33 per cent, the government has given the more influential OBC groups something to cheer at as more of them can now benefit from quotas.
"It is a historic decision. The Modi government has met two long-pending demands of the OBC. The National Commission for Backward Classes in 2011 and a parliamentary panel in 2015 called for sub-categorisation among the OBC," Union Minister Santosh Gangwar, a Kurmi leader from Uttar Pradesh, said.
Hukumdev Narayan Yadav, a party MP and former Union minister, said OBC Members of Parliament had long been raising the demand for increasing the creamy layer ceiling.
Extremely backward sections of the OBC have been pushing for a quota as well, he said.
"It is a very welcome move. OBCs across the country will laud it," he said.
The BJP leaders pointed out that sub-categorisation already exists in many states, including Bihar, where it was introduced by former chief minister Karpoori Thakur to ensure that members of the extremely backward communities benefited from OBC quotas.
At a time some dominant backward castes, such as Yadavs, are being seen as adversarial to the BJP in states like Bihar and Uttar Pradesh, the government's move to ensure a fixed quota for the extremely backward sections is likely to help the saffron party build its vote base.
Non-Yadav OBCs were believed to have contributed to the party's victory in the UP assembly polls.
However, by also raising the creamy layer ceiling the government has sent out the message that it is alive to the concerns of the numerically strong backward groups such as Yadavs and Kurmis.
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