Those who earn less than Rs 8 lakh a year, have less than five acre land qualify for the quota, said Union Minister Vijay Sampla. Jobs are already reserved for impoverished and disadvantaged lower castes. The criteria for economic quota will be the same as that for Other Backward Castes or OBCs.

"This was a long-standing demand but only the Modi government had the courage to do it. Brahmins, baniyas, Christians, Muslims, all will benefit from this," Vijay Sampla said.

The minister said the decision should not be seen as political as it is "the government's duty to understand the feelings of the people and fulfill their needs".

The government's big move comes at a time the ruling BJP is seen by many to have lost its invincibility after its election defeats to the Congress in three major heartland states.

Sources say the bill has to be a constitutional amendment as it overshoots the Supreme Court's 50 per cent cap on quotas and takes the total to 60 per cent. Any increase from that limit will be subject to judicial scrutiny and is unlikely to get parliamentary approval immediately.

The government, however, wants to make a distinction between economic and social reservation. The Supreme Court's limit is for social reservation, say sources. It may be legally complicated but the move serves the purpose of telegraphing the government's commitment to the general population that does not have reservations, sources said.

The Congress alleged an election gimmick. "We will continue to support every such step that provides employment. But when the Modi government has suddenly woken up to the problems of the economically poor, facing defeat in 2019 polls and with 100 days go to the polls, a question of intent is raised," said the party's Randeep Surjewala. "We welcome reservation in jobs, but when will you create jobs?"

Another union minister, Shiv Pratap Shukla, said the decision "has nothing to do with polls" as the party had got considerable votes from the upper castes in Madhya Pradesh and Rajasthan. But sources admit the ruling party is concerned about the alienation of the upper caste, especially in politically vital Uttar Pradesh.

In a 1992 order, the Supreme Court had capped reservations in government jobs and education at 50 per cent. But in an order in July 2010, it allowed states to exceed that limit if they had solid scientific data to justify the increase.