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Whats New | Central Govt Employees - 7th Pay Commission - Staff News
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Recovery of Income Tax for the year 2020-21 (Assessment Year 2021-22) - Salient features of the new tax regime (optional) - Self declaration Form | Central Govt Employees - 7th Pay Commission - Staff News
Recovery of Income Tax for the year 2020-21 (Assessment Year 2021-22) - Salient features of the new tax regime (optional) - Self declaration Form | Central Govt Employees - 7th Pay Commission - Staff News: Recovery of Income Tax for the year 2020-21 (Assessment Year 2021-22) - Salient features of the new tax regime (optional) - Self declaration Form
Wednesday, 20 April 2016
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Tuesday, 22 December 2015
Minimum pension fixed for retired Central Government employees
Minimum Pensions
The minimum pension fixed for retired Central Government employees is Rs. 3,500/- per month with effect from 01.01.2006. For pensioners, including those retired from public sector corporations and other establishments, to whom the Employees’ Pension Scheme (EPS), 1995 framed under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 applies, provision of a minimum pension of Rs. 1,000/- per month has made with effect from 01.09.2014.
The Sixth Central Pay Commission had recommended pension of Rs. 3,330/- per month in respect of employees retired from the Central Government. The minimum pension of Rs. 1,000/- per month under the EPS, 1995 implemented by the Central Government was one of the recommendations of the Expert Committee constituted by the Government. Apart from this, the Committee on Petitions of the Rajya Sabha under the chairmanship of Shri Bhagat Singh Koshiyari in its 147th Report had recommended to increase Government share of contribution under EPS, 1995 from 1.16 per cent to 8.33 per cent to support the minimum pension level of Rs. 3000/- per month. However, it was not found feasible for implementation.
No complaints regarding anomalies in minimum pension in respect of Central Government employees have been received by the Government.
However, representations, grievances and complaints have been received from various quarters that the monthly pension to pensioners under EPS, 1995 have not increased to Rs. 1,000/- per month even after the notification in respect of pensioners who had taken short service pension, commutations or return of capital. Some grievances also relate to the fact that pension has not increased for those drawing more than Rs. 1,000/- per month.
Consequent upon implementation of the minimum pension to pensioners under EPS, 1995 vide notification number GSR 593(E) dated 19.08.2014, the pension of all member/widow(er)/disabled/ nominee/dependent parent pensioners whose original pension was less than Rs. 1,000/- per month had been fixed at the minimum of Rs. 1,000/- per month. In cases where members had preferred option for Commutation, Return of Capital and Short Service Pension and have already availed these benefits as per choice exercised by them at the time of making pension claim, the deductions on account of these options would continue to apply on the minimum pension of Rs. 1,000/- per month that has now been fixed. In such cases, the pension amount would be less than Rs. 1,000/- per month even after implementation of the said notification.
This information was given by Shri Bandaru Dattatreya, Minister of State (IC) for Ministry Labour and Employment, in reply to a question in Lok Sabha today.
Source: PIB News
Sunday, 13 December 2015
CGHS - No. of Beneficiaries enrolled, details of facilities and medical equipment admissible them, dt : 11.12.15
GOVERNMENT OF INDIA
MINISTRY OF HEALTH AND FAMILY WELFARE
LOK SABHA
UNSTARRED QUESTION NO: 2282
ANSWERED ON: 11.12.2015
CGHSRAMESWAR TELI
SUBHASH RAMRAO BHAMRE
Will the Minister of
HEALTH AND FAMILY WELFARE be pleased to state:-
Will the Minister of HEALTH AND FAMILY WELFARE be pleased to state:
(a) the number of beneficiaries enrolled under the Central Government Health Scheme (CGHS) along with the details of facilities and medical equipment admissible to them;
(b) whether instances of denial of certain facilities and medical equipment to the CGHS beneficiaries despite doctor''s advice have come to the notice of the Government, if so, the details thereof during the last three years and the reasons therefor along with the action taken by the Government in this regard;
(c) whether many CGHS empanelled hospitals have refused to treat the patients for non-payment of the outstanding dues causing serious problems to the CGHS beneficiaries, if so, the details thereof and the action taken by the Government in this regard; and
(d) whether the Government has taken note of inconvenience caused to the beneficiaries due to frequent break down/ deficient Internet services in CGHS dispensaries, if so, the details thereof along with the corrective action taken by the Government in this regard?
ANSWER
THE MINISTER OF HEALTH AND FAMILY WELFARE
(SHRI JAGAT PRAKASH NADDA)
(a): The Central Government Health Scheme (CGHS) is providing comprehensive healthcare facilities to the central Government employees and pensioners and some other selected categories of persons in 26 cities across the country. At present there are 29,65,940 beneficiaries enrolled under CGHS.
The facilities and medical equipments available to CGHS beneficiaries include:
(i) OPD treatment and medicines from CGHS Wellness Centres.
(ii) Specialist Consultation at Govt. Hospitals.
(iii) Hospitalization at Govt. and CGHS empanelled hospitals.
(iv) Investigations at Govt. and empanelled Diagnostic centres.
(v) Medical consultation and dispensing of medicines in Ayurveda, Homeopathy, Unani and Siddha systems of medicine (AYUSH).
(vi) In case of emergency, CGHS beneficiaries can go to any hospital, empanelled or non-empanelled and avail medical treatment.
(vii) Reimbursement of expenses for treatment in Private unrecognized hospitals in case of emergency.
(viii) The beneficiary can go to any CGHS Wellness Centre in the country.
(ix) Reimbursement of expenses incurred for purchase of medical equipments such as hearing aid, hip/knee joint implants, artificial limbs, pace makers, ICD/ Combo device, CPAP, Bi-PAP, Oxygen Concentrator, Neuro implants etc., as per the CGHS ceiling rates and guidelines.
(b): No instance of denial has come to the notice of the Government. At times, requests are received for issue of medical equipments / facilities which are not approved under CGHS. The requests for such unapproved medical equipments and facilities are considered in consultation with the specialists in the field and are decided on a case to case basis. In case the committee of experts does not find justification for the requested appliances/facilities, the same are not provided.
(c): As per reports received from the field, at present, Ruby Hall Clinic, Pune has restricted the cashless facilities to serious/emergency cases, and cardiology and oncology cases only, due to pendency of hospital bills.
CGHS has cleared part of the outstanding dues of the hospital and process of clearance of rest of the dues has been started by the Pay and Accounts Office.
(d): In order to deal with the situation of breakdown of internet connectivity due to technical reasons, Chief Medical Officers – in charge (CMO i/c) of Wellness Centres have been provided user Data cards. They also take up the matter with the officers of MTNL/BSNL and NIC for early restoration of the same. Instructions are also in place for issue of medicines manually in case of breakdown in connectivity.
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Sunday, 6 December 2015
Report of Seventh Central Pay Commission Chapter 10.3 - National Pension System
Introduction10.3.1 Pension has been one of the key Terms of Reference (TORs) for successive Pay Commissions. While the VI CPC was the first Pay Commission to have been constituted after the introduction of the National Pension System (NPS) which came into effect on 01.01.2004, the VII CPC is the first one to be constituted after some experience has been gained on this count.
Pension Related TOR of the Commission
10.3.2 The TOR of the present Commission - to examine the principles which should govern the structure of pension and other retirement benefits, keeping in view that retirement benefits of all Central Government employees appointed on and after 01.01.2004 are covered by the National Pension System (NPS)–limits the mandate of this Commission only to the Old Pension System (OPS). However, during its interaction with staff associations and other stakeholders, the Commission received many grievances/suggestions relating to both the OPS and the NPS. It has also been averred, inter alia, that NPS is proving to be an impediment in attracting and subsequently retaining the best talent for the Central Civil Services/All India Services (AIS). In this backdrop, the Commission decided to address the grievances related to NPS, which have been discussed in this chapter. Issues relating to OPS and other retirement benefits have been dealt in Chapter 10.1 and Chapter 10.2.
NPS Background
10.3.3 The Commission notes that the NPS is the culmination of a series of social security and pension related reform initiatives in India. As in many other countries, pension reforms in India were driven by the fiscal constraints of supporting a public pension system and the longer-term problems of an ageing population. Government of India, in 1998, set up the Committee for Old Age Social and Income Security (OASIS). The OASIS committee concluded, among other things, that the Defined Benefit Scheme (DBS), serving the Central Government retirees, is unaffordable for government and it should be replaced by a Defined Contribution Scheme (DCS).
10.3.4 The Commission notes that the total pension liability on account of Central Government employees had risen from 0.6 percent of GDP (at constant prices) in 1993-94 to 1.66 percent of GDP (at constant prices) in 2002-03. Pension expenditure of the Central Government grew at a compound annual growth rate (CAGR) of 21 percent during the period 1990 to 2001. This was also reflected in the increasing fiscal deficits. Further, in the DBS, pensions were wage indexed, and thus the outgo on this account would have increased manifold. The stressed fiscal situation, thus, set the stage for introduction of the NPS in India. The Bhattacharya Committee Report (HLE Group on NPS) (Feb 2002) recommended that an unfunded Defined Benefit (DB), Pay As You Go (PAYG) scheme or a pure Defined Contribution (DC) scheme would not be suitable and therefore recommended a hybrid DB/DC scheme to meet the requirements of central civil servants.
International Experience on Pension Reforms
10.3.5 Pension reforms, in recent times, have been initiated in many countries across the world. The Commission notes that an aging population, changing social structures, uncertain and inadequate social security benefits and rising fiscal liabilities have been the major causes behind pension reforms, especially for a transition from DBS to DCS.
Introduction of NPS
10.3.6 On the basis of various reports, the Central Government made the decision to place all new recruits into Central Government from 01.01.2004 onwards (excluding Defence Forces) under NPS. NPS is managed by the Pension Fund Regulatory and Development Authority (PFRDA), which was initially set up as an interim authority. The PFRDA Act was passed by Parliament and notified w.e.f. 01.02.2014, bestowing statutory status on the authority.
NPS Features
10.3.7 Under the NPS, employees contribute 10 percent of their monthly salary (basic plus DA) towards their pension with matching contribution from Central Government. In respect of the AIS officers working under them, the matching contribution is made by the State Governments. Three professional Pension Fund Managers invest the funds under NPS following an asset allocation framework mandated by government. The Central Record Keeping Agency (CRA) maintains a separate pension account for each individual employee identified by a unique Permanent Retirement Account Number (PRAN). Individual employees have been given online access through the CRA website to view the status of their pension wealth.
10.3.8 Under the NPS, upon superannuation, the individual is required to invest at least 40 percent of pension wealth for purchase of annuity and the remaining up to 60 percent is paid to him as lump sum. The annuity provides for pension for the lifetime of the employee. Individual subscribers to the NPS are not covered under the General Provident Fund. Regulations issued by the PFRDA now provide for partial withdrawals up to 25 percent of the contribution made by the subscriber to his individual account after at least ten years from the date of joining, up to a maximum of three times during the tenure of the subscription for certain specified purposes, before superannuation. The regulations issued by PFRDA also provide that if the employee dies in service, then at least 80 percent of the accumulated pension wealth shall be mandatorily utilized for purchase of annuity and the balance amount would be paid to the nominee(s)/legal heirs.
Performance of the NPS
10.3.9 Over 13 lakh Central Government subscribers have accumulated pension wealth of over Rs.24,000 crore by the end of 2013-14. The Compound Annual Growth Rate (CAGR) of returns on the scheme are tabulated below:-
( in percent)
| Year | 2008-09 | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| CAGR (Central Govt.) | 12.02 | 12.06 | 10.72 | 9.41 | 9.95 | 9.10 | 9.11 |
10.3.10 The Commission further notes that all State Governments (with the exception of Tripura and West Bengal) have switched to NPS on the Central Government pattern.
Grievances against the NPS
10.3.11 The NPS has now been in effect for over 10 years. During this period, there has been perceptible progress in putting together the architecture and providing information to subscribers. Major concerns, however, remain. Broadly, these are as under:
i. The larger federations and staff associations advocated scrapping the NPS on the ground that it discriminates between two sets of government employees.
ii. Individuals covered under NPS have pleaded for reverting to the OPS on the grounds of uncertainty regarding the actual value of their future pension in the face of market related risks.
iii. Individuals have pointed out that under NPS, the effective salary becomes less since the employee has to mandatorily contribute 10 percent of pay towards the pension fund.
iv. Individuals have stated that grievance redressal facility is not effective and consultation with stakeholders has been non-existent. This communication gap has generated insecurity in the minds of stakeholders including staff and Group ‘A’ officers of Central Government as well as All India Service Officers.
v. Associations have complained that Family Pension after the death of the employee is not ensured in the NPS. Moreover, if an employee dies at an early age, the family would suffer since annuity from the contribution would be grossly inadequate.
vi. Individuals have complained that NPS subscribers have no recourse to GPF for their savings. Their personal savings (10% of salary) are considered part of a larger corpus. It has been pointed out that the right approach would be to consider only government’s contribution and the returns earned on it as the effective amount available for purchase of annuities.
vii. Associations have pointed out that unlike the facility under GPF, it is not possible to take refundable advances under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere.
viii. Grievances also relate to tax treatment under NPS. While contributions and accumulations in NPS are exempt, lump sum withdrawals from NPS at any time are taxable at par with any other income. In addition, there is a service tax liability on any amount utilised for purchase of annuity.
ix. It has been pointed out that though NPS became effective from 2004, detailed instructions were issued only in late 2009 and in many cases the credit of contributions began from 2012. In the case of AIS officers in some States, contributions by the concerned State Government are yet to be fully made and deployed. The net result of this has been that contributions for the period 2004-2012 have not been made in full or have earned simple interest and did not get any market linked returns. Because of the prevailing confusion, contributions made by some AIS officer have been returned to them without interest. This will have a huge impact on the eventual corpus as the benefits of compounding were not available for the first 8 -9 years.
x. Individuals, in their presentation before the Commission, stated that annuities under NPS have no compensation for inflation unlike dearness relief under OPS. Further, in the case of OPS there is a revision in basic pension itself after every Pay Commission. This too is not available in respect of annuity of NPS subscribers.
xi. It has been pointed out that government employees are not given freedom of choice in choosing their fund manager based on performance and track record as the contributions are divided in a pre-specified ratio among selected Pension Fund Managers. It has been stated that government employees have no say in asset allocation of their money.
xii. Concerns were raised that the contribution of 10% +10%will not besufficient to create a corpus which provides reasonable assurance that pension will be 50 percent of the last pay drawn.
Analysis of the Issues by the Commission
10.3.12 The Commission has examined these concerns raised by the stakeholders. The Commission also interacted with Chairman, PFRDA, and representatives of the Department of Pensions and Pensioners Welfare (DPPW), Department of Personnel and Training (DoPT), Department of Expenditure (DoE) and the Department of Financial Services (DFS).
10.3.13 In so far as the future value of pension under NPS is concerned, the Commission notes that this would depend upon a combination of factors: (i) performance of the invested fund, which in turn would depend on the asset mix of the investment and general economic situation of the country, (ii) cost of financial intermediation, (iii) contribution rates, (iv) period of contribution, (v) performance of the fund manager and (vi) development of the annuity market.
Analysis of the Asset Mix of Investments
10.3.14 On asset mix of the investment, the pension funds, the world over, are invested in different assets including government and corporate bonds, equities, foreign securities etc. government bonds are generally the lowest risk and lowest yield. Corporate bonds and equities are higher risk and higher yield. Typically, systems use a mix of at least two types of assets– Government Bonds and Corporate Bonds/Equities.
10.3.15 As per the investment guidelines stipulated by the government for Central Government employees under NPS, up to 55 percent can be invested in government bonds, up to 40 percent
in corporate debt securities, up to 15 percent in equities and up to 5 percent in money market instruments. International experiences on asset mix vary across countries which have adopted the DCS.
10.3.16 The Commission notes that an innovative approach to investment under the DCS is the Life Cycle Approach. Under this, the asset mix of each individual changes based on his/her age. The underlying assumption under this approach is that younger workers are better able to absorb year on year volatility and therefore can undertake risk while older workers should reduce risk as they approach retirement.
10.3.17 A carefully selected asset mix is the sine qua non to higher returns. The Commission recommends that the investment choices under NPS be calibrated on a lifecycle approach and the choices be offered in a simple manner so that any lay person can understand and act accordingly. The Commission also recommends that government, in consultation with PFRDA, come up with different options for investment mix and provide subscribers a range of options.
Contribution Rates
10.3.18 In DCS, typically, the employees as well as the employers contribute towards a pension fund. As discussed earlier, the quantum of pension payouts would also depend upon the contribution rates. Higher the contribution rate, better would be the pension payouts. The contribution rates for both the employees and the employers vary across the globe. The Commission has received suggestions that the government’s contribution should be enhanced from the present 10 percent in aid of a higher payout under the NPS. Associations and individuals have made presentations before the Commission highlighting that forecasts suggest that a 10 percent contribution from government will not be adequate to provide reasonable post retirement financial security in all cases. The Commission, therefore, recommends that this important aspect should be re-examined in detail by an expert body for making course corrections if required.
Period of Contribution
10.3.19 The Commission notes that time is of the essence in building up a reasonable corpus and ensuring that effects of compounding are significant. It is therefore essential that contributions by individuals and corresponding contributions by government are made in time, and more importantly, are deployed without any loss of time. Any delays in this respect, particularly in the initial years can have a large impact on the eventual corpus.
2004-2011 Entrants
10.3.20 Government employees who have joined service between 2004 and 2011 have suffered due to delay in finalizing the structure of the NPS and the issue of detailed instructions. Although they have made regular contributions, in many cases, this money and/or counterpart contributions were not deployed in the market. In the case of AIS officers, some states are yet to release counterpart contributions or pay interest on delayed contributions. This has led to a situation where the accumulated corpus even after 11 years of service could be meagre. It is necessary that this situation which arose during the transition from OPS to NPS be addressed. The Commission therefore recommends that Central Governments and State Governments should, in a time bound manner, ensure that all the due contribution along with compounded interest, where contributions have been delayed, be deposited in the accounts of the beneficiaries. Advisories should be issued to the State Governments to deposit amounts, if not already done, in respect of NPS beneficiaries belonging to All India Services.
10.3.21 Many Association have pointed out that unlike the facility under GPF, it is not possible to make withdrawals under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere.
10.3.22 The Commission notes that under the NPS Tier-I account, a subscriber is permitted to make partial withdrawal of twenty five percent of the contributions made to his/her individual pension account for certain specified purposes. Such withdrawals are permitted a maximum of three times during the entire tenure of subscription and a period of at least five years should have elapsed between two such withdrawals.
10.3.23 The Commission further notes that there exists a voluntary Tier-II account. Under this account, a subscriber can, at any time, withdraw the accumulated wealth either in full or part and there is no limit on such withdrawals provided the account has sufficient balance of accumulated pension wealth to cover the amount being withdrawn. However, the Tier-II account is yet to be made operational. The Commission therefore recommends that PFRDA should take steps to make the Tier-II accounts operational as early as possible to enable the NPS subscribers the facility of withdrawals from their accounts in case of requirement.
Transparency under NPS
10.3.24 Many associations and individuals have complained that the information relating to the NPS is inadequate, resulting in high degree of uncertainty in the minds of contributors about post-retirement benefits. The Commission noted that PFRDA sends a communication to every participant each month with the current pension wealth and the latest contribution that has been credited. The Commission recommends that focused efforts be made to capture email addresses and mobile numbers of subscribers so that seamless communication is ensured for all subscribers. The Commission recommends that consultation with stakeholders should also be held periodically in different parts of the country.
10.3.25 The Commission notes that no department of Government of India is taking ownership of the NPS. The Commission recommends that a Committee consisting of Secretary, Department of Financial Services, Secretary, Department of Pensions and Pensioners Welfare and Secretary, Department of Administrative Reforms and Public Grievances may be constituted to review the progress of implementation of NPS. The Commission also recommends that steps should b e taken for establishment of an Ombudsman f or redressing individual grievances relating to NPS.
Tax Treatment under the NPS
10.3.26 NPS is under the Exempt–Exempt - Tax (EET) regime while the General Provident Fund under the OPS is under Exempt–Exempt–Exempt (EEE) dispensation. Under the NPS, while the contributions and the accumulations are tax-exempt, withdrawals are taxable. As such, this is an inferior tax treatment when compared to other pension programmes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund wherein contributions, accumulations and withdrawals are tax-exempt. The Commission feels that tax neutrality should be ensured across various avenues for long term savings for postretirement incomes so that the employees covered by NPS are not ata disadvantage. The Commission therefore recommends that withdrawals under the NPS should be tax-exempt to place NPS at par with other pension schemes. The Commission also recommends that the service tax levied at the time of annuity purchase by NPS subscribers should be exempted.
Issue of Family Pension In Case Of Death of the Subscriber
10.3.27Another complaint received by the Commission from staff associations and individuals is that Family Pension after the death of the employee is not ensured in the NPS. The Commission notes that the government had provisionally extended benefits under the Central Civil Service (Extraordinary Pension) Rules, Family Pension/Extraordinary Family Pension/Liberalised Pensionary Award to government servants appointed on or after 01.01.2004.
10.3.28 Rules regulating these benefits have now been notified by the PFRDA. PFRDA regulations provide for an exit option from NPS in case of premature death of the subscriber by availing of additional relief from government, in which case the entire accumulated pension wealth inclusive of subscriber’s contribution would be transferred to government. The Commission recommends notification of a scheme by government for provision of additional relief in such cases consequent to exit from NPS.
Framing of Rules and Regulations
10.3.29 The Commission notes that rules and regulating relating to NPS are being framed and notified by PFRDA from time to time. Associations and individual officers have raised the issue of the need for greater involvement of stakeholders in finalizing these regulations The Commissionre commends that government encourage the PFRDA to set up a strong consultative mechanism involving the DPPW, DoPT, DFS and some associations of employees for a review of regulations and for finalizing future regulations to bring clarity and remove uncertainty relating to NPS. The Commission also recommends that draft regulations should be widely publicized to enable subscribers to respond to any proposed changes, as normally done by other regulatory authorities.
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Highlights of Recommendations of Seventh Central Pay Commission
 |
| The Chairman of the Seventh Pay Commission, Justice A.K. Mathur submitted its report to the Union Minister for Finance, Corporate Affairs and Information & Broadcasting, Shri Arun Jaitley, in New Delhi on November 19, 2015. |
Recommended Date of implementation : 01.01.2016
Minimum Pay: Based on the Aykroyd formula, the minimum pay in government is recommended to be set at Rs.18,000 per month.
Maximum Pay : Rs.2,25,000 per month for Apex Scale and Rs.2,50,000 per month for Cabinet Secretary and others presently at the same pay level.
Financial Implications:
The total financial impact in the FY 2016-17 is likely to be Rs.1,02,100 crore, over the expenditure as per the ‘Business As Usual’ scenario. Of this, the increase in pay would be Rs.39,100 crore, increase in allowances would be Rs. 29,300 crore and increase in pension would be Rs.33,700 crore.
Out of the total financial impact of Rs.1,02,100 crore, Rs.73,650 crore will be borne by the General Budget and Rs.28,450 crore by the Railway Budget.
In percentage terms the overall increase in pay & allowances and pensions over the ‘Business As Usual’ scenario will be 23.55 percent. Within this, the increase in pay will be 16 percent, increase in allowances will be 63 percent, and increase in pension would be 24 percent.
The total impact of the Commission’s recommendations are expected to entail an increase of 0.65 percentage points in the ratio of expenditure on (Pay+Allowances+ Pension) to GDP compared to 0.77 percent in case of VI CPC.
New Pay Structure: Considering the issues raised regarding the Grade Pay structure and with a view to bring in greater transparency, the present system of pay bands and grade pay has been dispensed with and a new pay matrix has been designed. Grade Pay has been subsumed in the pay matrix. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the pay matrix.
Fitment: A fitment factor of 2.57 is being proposed to be applied uniformly for all employees.
Annual Increment : The rate of annual increment is being retained at 3 percent.
Modified Assured Career Progression (MACP) :
Performance benchmarks for MACP have been made more stringent from “Good” to “Very Good”.
The Commission has also proposed that annual increments not be granted in the case of those employees who are not able to meet the benchmark either for MACP or for a regular promotion in the first 20 years of their service.
No other changes in MACP recommended.
Military Service Pay ( MSP): The Military Service Pay, which is a compensation for the various aspects of military service, will be admissible to the Defence forces personnel only. As before, Military Service Pay will be payable to all ranks up to and inclusive of Brigadiers and their equivalents. The current MSP per month and the revised rates recommended are as follows:
| Present | Proposed | ||
| i. | Service Officers | Rs.6,000 | Rs.15,500 |
| ii. | Nursing Officers | Rs.4,200 | Rs.10,800 |
| iii. | JCO/ORs | Rs.2,000 | Rs. 5,200 |
| iv. | Non Combatants (Enrolled) in the Air Force | Rs.1,000 | Rs. 3,600 |
Short Service Commissioned Officers: Short Service Commissioned Officers will be allowed to exit the Armed Forces at any point in time between 7 and 10 years of service, with a terminal gratuity equivalent of 10.5 months of reckonable emoluments. They will further be entitled to a fully funded one year Executive Programme or a M.Tech. programme at a premier Institute.
Lateral Entry/Settlement: The Commission is recommending a revised formulation for lateral entry/resettlement of defence forces personnel which keeps in view the specific requirements of organization to which such personnel will be absorbed. For lateral entry into CAPFs an attractive severance package has been recommended.
Headquarters/Field Parity : Parity between field and headquarters staff recommended for similar functionaries e.g Assistants and Stenos.
Cadre Review : Systemic change in the process of Cadre Review for Group A officers recommended.
Allowances : The Commission has recommended abolishing 52 allowances altogether. Another 36 allowances have been abolished as separate identities, but subsumed either in an existing allowance or in newly proposed allowances. Allowances relating to Risk and Hardship will be governed by the proposed Risk and Hardship Matrix.
Risk and Hardship Allowance: Allowances relating to Risk and Hardship will be governed by the newly proposed nine-cell Risk and Hardship Matrix, with one extra cell at the top, viz., RH-Max to include Siachen Allowance.
The current Siachen Allowance per month and the revised rates recommended are as follows:
| Present | Proposed | ||
| i. | Service Officers | Rs.21,000 | Rs.31,500 |
| iii. | JCO/ORs | Rs.14,000 | Rs.21,000 |
This would be the ceiling for risk/hardship allowances and there would be no individual RHA with an amount higher than this allowance.
House Rent Allowance: Since the Basic Pay has been revised upwards, the Commission recommends that HRA be paid at the rate of 24 percent, 16 percent and 8 percent of the new Basic Pay for Class X, Y and Z cities respectively. The Commission also recommends that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent respectively when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.
In the case of PBORs of Defence, CAPFs and Indian Coast Guard compensation for housing is presently limited to the authorised married establishment hence many users are being deprived. The HRA coverage has now been expanded to cover all.
Any allowance not mentioned in the report shall cease to exist.
Emphasis has been placed on simplifying the process of claiming allowances.
Advances:
All non-interest bearing Advances have been abolished.
Regarding interest-bearing Advances, only Personal Computer Advance and House Building Advance (HBA) have been retained. HBA ceiling has been increased to Rs.25 lakhs from the present Rs.7.5 lakhs.
Central Government Employees Group Insurance Scheme (CGEGIS) : The Rates of contribution as also the insurance coverage under the CGEGIS have remained unchanged for long. They have now been enhanced suitably. The following rates of CGEGIS are recommended:
| Present | Proposed | |||
| Level of Employee | Monthly Deduction (Rs.) | Insurance Amount (Rs.) | Monthly Deduction (Rs.) | Insurance Amount (Rs.) |
| 10 and above | 120 | 1,20,000 | 5000 | 50,00,000 |
| 6 to 9 | 60 | 60,000 | 2500 | 25,00,000 |
| 1 to 5 | 30 | 30,000 | 1500 | 15,00,000 |
Medical Facilities:
Introduction of a Health Insurance Scheme for Central Government employees and pensioners has been recommended.
Meanwhile, for the benefit of pensioners residing outside the CGHS areas, CGHS should empanel those hospitals which are already empanelled under CS (MA)/ECHS for catering to the medical requirement of these pensioners on a cashless basis.
All postal pensioners should be covered under CGHS. All postal dispensaries should be merged with CGHS.
Pension: The Commission recommends a revised pension formulation for civil employees including CAPF personnel as well as for Defence personnel, who have retired before 01.01.2016. This formulation will bring about parity between past pensioners and current retirees for the same length of service in the pay scale at the time of retirement.
The past pensioners shall first be fixed in the Pay Matrix being recommended by the Commission on the basis of Pay Band and Grade Pay at which they retired, at the minimum of the corresponding level in the pay matrix.
This amount shall be raised to arrive at the notional pay of retirees, by adding number of increments he/she had earned in that level while in service at the rate of 3 percent.
In the case of defence forces personnel this amount will include Military Service Pay as admissible.
Fifty percent of the total amount so arrived at shall be the new pension.
An alternative calculation will be carried out, which will be a multiple of 2.57 times of the current basic pension.
The pensioner will get the higher of the two.
Gratuity : Enhancement in the ceiling of gratuity from the existing Rs.10 lakh to Rs.20 lakh. The ceiling on gratuity may be raised by 25 percent whenever DA rises by 50 percent.
Disability Pension for Armed Forces: The Commission is recommending reverting to a slab based system for disability element, instead of existing percentile based disability pension regime.
Ex-gratia Lump sum Compensation to Next of Kin: The Commission is recommending the revision of rates of lump sum compensation for next of kin (NOK) in case of death arising in various circumstances relating to performance of duties, to be applied uniformly for the defence forces personnel and civilians including CAPF personnel .
Martyr Status for CAPF Personnel : The Commission is of the view that in case of death in the line of duty, the force personnel of CAPFs should be accorded martyr status, at par with the defence forces personnel.
New Pension System : The Commission received many grievances relating to NPS. It has recommended a number of steps to improve the functioning of NPS. It has also recommended establishment of a strong grievance redressal mechanism.
Regulatory Bodies : The Commission has recommended a consolidated pay package of Rs.4,50,000 and Rs.4,00,000 per month for Chairpersons and Members respectively of select Regulatory bodies. In case of retired government servants, their pension will not be deducted from their consolidated pay. The consolidated pay package will be raised by 25 percent as and when Dearness Allowance goes up by 50 percent. For Members of the remaining Regulatory bodies normal replacement pay has been recommended.
Performance Related Pay : The Commission has recommended introduction of the Performance Related Pay (PRP) for all categories of Central Government employees, based on quality Results Framework Documents, reformed Annual Performance Appraisal Reports and some other broad Guidelines. The Commission has also recommended that the PRP should subsume the existing Bonus schemes.
There are few recommendations of the Commission where there was no unanimity of view and these are as follows:
The Edge: An edge is presently accordeded to the Indian Administrative Service (IAS) and the Indian Foreign Service (IFS) at three promotion stages from Senior Time Scale (STS), to the Junior Administrative Grade (JAG) and the NFSG. is recommended by the Chairman, to be extended to the Indian Police Service (IPS) and Indian Forest Service (IFoS).
Shri Vivek Rae, Member is of the view that financial edge is justified only for the IAS and IFS. Dr. Rathin Roy, Member is of the view that the financial edge accorded to the IAS and IFS should be removed.
Empanelment: The Chairman and Dr. Rathin Roy, Member, recommend that All India Service officers and Central Services Group A officers who have completed 17 years of service should be eligible for empanelment under the Central Staffing Scheme and there should not be “two year edge”, vis-Ã -vis the IAS. Shri Vivek Rae, Member, has not agreed with this view and has recommended review of the Central Staffing Scheme guidelines.
Non Functional Upgradation for Organised Group ‘A’ Services : The Chairman is of the view that NFU availed by all the organised Group `A’ Services should be allowed to continue and be extended to all officers in the CAPFs, Indian Coast Guard and the Defence forces. NFU should henceforth be based on the respective residency periods in the preceding substantive grade. Shri Vivek Rae, Member and Dr. Rathin Roy, Member, have favoured abolition of NFU at SAG and HAG level.
Superannuation: Chairman and Dr. Rathin Roy, Member, recommend the age of superannuation for all CAPF personnel should be 60 years uniformly. Shri Vivek Rae, Member, has not agreed with this recommendation and has endorsed the stand of the Ministry of Home Affairs.
The full report is available in the website, Click to view.
Seventh Pay Commission Report: Principles of Pay Determination and Determination of Minimum Pay
Report of the Seventh CPC
Principles of Pay Determination Chapter 4.1
4.1.1 The Seventh CPC has been set up at a time of many noticeable changes on the governance front. The principal roleof the government as the prime facilitator has gained firm ground. E-Governance has made considerable progress, facilitating communication and improving coordination of authorities at different tiers of government. There is a specific emphasis on Minimum Government and Maximum Governance, harping on the concept of a leaner bureaucracy with more skilled people. There is also a definite need to harmonize the functioning of the Central Government with the demands of the emerging global economic scenario. This Commission had to keep all these factors while finalizing the compensation structure for the Central Government employees.
Compensation Structure in a Government Setting
4.1.2 Employee compensation is an important element of government functioning. In general, the level and structure of compensation should aim to achieve four objectives: (i) pay should be sufficient to attract and retain high quality staff; (ii) pay should motivate staff to work hard; (iii) pay policy should induce other human resource management reforms; and (iv) pay should be set at a level to ensure long term fiscal sustainability.
Our Terms of Reference (ToRs)
4.1.3 The ToRs of the Seventh CPC broadly revolve around these objectives. The Commission has been mandated to ‘examine, review, evolve and recommend changes that are desirable and feasible regarding the principles that should govern the emoluments structure including pay, allowances and other facilities/benefits, in cash or kind,having regard to rationalization and simplification therein as well as the specialized needs of various departments.’
4.1.4 In carrying out the above, the remaining terms of reference laid down certain pointers. These include:
- ‘In so far as the defence forces are concerned the historical and traditional parities with due emphasis on aspects unique to defence personnel is required to be kept in mind.’
- ‘The framework in the emoluments structure is required to be linked with the need to attract the most suitable talent to government service, promote efficiency, accountability and responsibility in the work culture, and foster excellence in the public governance system...’
- The recommendations have to be made keeping in view the economic conditions in the country and need for fiscal prudence’ as also‘the need to ensure that adequate resources are available for developmental expenditures and welfare measures.’
- Also to be kept in view is ‘the prevailing emoluments structure and retirement benefits available to employees of the Central Public Sector Undertakings’ as also ‘the best global practices and their adaptability and relevance in Indian conditions.’
Challenges before this Commission
4.1.5 The real challenge before this Commission is to provide a pay structure which is competitive yet affordable, attractive yet acceptable, forward looking yet adaptable, simple yet rational, and one which matches with the current socio-economic and political conditions as well as the changing perception of the overall administrative machinery and the public governance system.
4.1.6 One of the peculiarities of the Indian civil structure and the pay structure that has been in vogue is the high degree of emphasis on uniformity and relativity. In interacting with various associations, federations, heads of institutions, what has clearly come across is the prevalence of historical equations across the various cadres in government. Disturbances caused in any of these have an immediate and very vocal effect by way of strident demands in restoring earlier parities. Extensive litigation has come to be the norm. The second issue relates to ease of administration. A simple structure with rules of fixation that are easy to understand and apply would take away the possibility of either inadvertent errors or any element of arbitrariness. This Commission has, therefore set simplicity and complete transparency as a basic guiding principle.
4.1.7 From the employees’ perspective, the upper most aspect is naturally that the emoluments should appropriately reflect the qualifications and the skill sets that each individual brings to this system. Apart from being fair and adequate, what is crucial is that the pay structure should correctly reflect the relative positions in the hierarchy. In its deliberations, the Commission has found that the preponderance of grievances relates to the emoluments drawn by others as opposite to what is received by oneself. Due care, therefore, has been given to the aspect of equity.
4.1.8 Over the years, due to downsizing of bureaucracy, issues relating to diminishing or in some cases non-existent promotional avenues have impacted the employees’ motivational levels. To address this problem, various schemes of assured career progression have been introduced by previous Pay Commissions. It is now one of the major aspirational challenges spurring work efficiency and which needs to be acknowledged by the Pay Commission. The emoluments structure is now expected to provide scope for career advancement by way of financial upgradation at reasonable intervals so as to keep the workforce motivated.
Approach of this Commission
4.1.9 The efforts of the Commission have been to devise a pay structure to address all the above listed issues and concerns. Special emphasis has been laid on designing a pay matrix which is simple, transparent, predictable and easily comprehensible. During their interactions with the Commission, the stakeholders placed many demands, ranging from common entry pay, rationalization of the existing grade pay structure, common treatment of like cadres, transparent pay structure as also increasing the frequency of the MACP. The new pay matrix incorporates all these features: subsuming the grade pay, the rationalized matrix presents the whole universe of pay levels in one simple chart. The levels have been rationalized too, displaying a logical pay progression. Employees would be able to see their pay level, where they fit in and how they are likely to progress over their career span. The Commission has also recommended simplified procedures for computation of pension.
4.1.10 On the same pattern, the entire structure of Allowances has been reviewed, rationalized and simplified. Inter-departmental and inter-Ministerial disparities regarding payment of various allowances have been sought to be removed as far as possible. An innovative Risk and Hardship Matrix has been proposed. Also, the Commission recommends that each allowance should be put in the public domain as a step towards greater transparency in governance.
4.1.11 The pay matrix addresses the important issue of adequacy of the compensation structure. The Commission observes that the purpose of pay is to compensate the employees for work done, to motivate them to perform well. The purposes also include attracting talent to government service and also retaining them, thus avoiding the need for expensive recruitment and training for replacement.
4.1.12 Ideally speaking, the compensation package should be a well defined function of prescribed educational and other entry level qualifications, job content, roles and responsibilities attached to the position etc. However, this is a difficult task, especially in a government setting, which has hundreds of organizations and plethora of job roles. The Commissionhas, to the extent possible, while dealing with individual cadres, attempted to bring about uniformity in their qualification and pay structure. This should ameliorate grievances of many ‘common’ cadres across organizations.
4.1.13 The Commission has also analysed the important question of whether wages are sufficient to attract and retain qualified staff. One way to address this question is to compare wages in government sector positions with wages for comparable positions in the private sector. This presumes that if wages in the government sector are too far below private sector wages, the government sector will have difficulty attracting and retaining the sort of staff it requires. In their presentations before the Commission, many associations brought out this aspect highlighting, inter alia, that the compensation pattern in the private sector is more remunerative. Although private sector wage comparators are difficult to obtain, the Commission feels that this could be the case in respect of only a few specialized segments. The results of the IIM, Ahmedabad study on comparing job families between the government and private/public sector has brought out the fact that while at lower levels salaries are much lower in the private sector as compared to government jobs, at the highest echelons of governance, the compensation in government is nowhere comparable to their counterparts in the private/ public sector.
4.1.14 But a mere comparison of the salaries should not form the benchmark for remuneration, it is to be viewed keeping in mind the uniqueness inherent in the government in terms of security of tenure, assured prospects of financial progression even when no promotional avenues exist, leave and pensionary privileges which are not available to their counterparts in the private/public sector.
4.1.15 Having said this, there is no denying that officers at higher level shoulder maximum responsibility and accountability and hence should be compensated accordingly. In light of this, the Commission has accorded slightly higher index of rationalisation at level of Senior Administrative Grade and above.
4.1.16 The Commission notes that government employees are entitled to a host of tangible and non tangible benefits -from job security, inflation indexed salary, assured prospects of financial progression- to name a few. It may be difficult to monetize some of these non-tangibles. That the government jobs retain their charm is evident from the increasing number of qualified candidates per advertised vacancy as well as from the low turnover rates among recent recruits.
4.1.17 The Commission has adopted an innovative design to make the remuneration structure attractive. It has adopted the need based minimum wage formula for designing the pay matrix. The rationalization of pay levels has been done keeping this minimum pay as the base for all calculations. It has been recommended that the minimum pay at each level will be the entry pay for direct recruits for those levels. Each level has been placed equidistantly. The various stages within a level moves upwards at the rate of 3 percent per annum. Owing to this rationalization, the quantum of increase in pay on promotion, either on regular basis or through the MACP, is likely to be substantial. This design will make the existing remuneration pattern in the government more attractive.
4.1.18 The basis for calculation of minimum and maximum pay, rate of pay progression across levels, basis for rationalisation and uniform approach towards fixation of pay have been clearly spelt out to leave no room for ambiguity or conjecture.
4.1.19 Historically, the qualification and skill set required as well as roles and responsibilities discharged at various levels in the overall hierarchy have been central to the basis for pay grading. The rationalisation index has been applied keeping this principle in mind.
4.1.20 There is uniformity in fixation of pay whether at entry level or on promotion or at the time of migrating from one pay regime to another. The new pay structure will bring out clearly what the total emoluments will be at a given point in time during one’s career span. The rate of pay progression will also be stated upfront for existing as well as new entrants.
4.1.21 Since, substantial delayering had already been attempted by the previous Pay Commissions, this Commission is not removing any levels, but to simplify the pay structure, the grades pay have been subsumed in the pay band to form distinct levels. The new pay structure is a construct in the matrix format and provides open ended progression in pay at all levels.
4.1.22 One recurrent theme in the representations of various associations relates to ‘equity’ or ‘Equal Pay for Equal Work.’ Ideally, the remuneration package should establish horizontal equity: employees should feel that their pay is comparable with the remuneration structure of similarly placed positions outside their organization. The employees should also feel that the pay structure shows linear progression pattern and thus the notion of vertical equity is also maintained. The Pay Matrix addresses these issues as well. The Commission has designed the pay structure in such a manner that the pay progression recognises the importance of vertical relativities and also assigns a reasonable basis to such progression. This has been done by assigning a uniform fitment factor of 2.57.
4.1.23 The Commission feels that there is strong need to create a culture of performance in government – from establishing standards of performance, to measuring, and promoting people based on performance. To emphasize on the culture of performance, the Commission has recommended that all the non-performers in the system should be phased out after 20 years. The Commission has recommended that Performance Related Pay should be introduced in the government and that all Bonus payments should necessarily be linked with productivity.
Determination of Minimum Pay Chapter 4.2
Introduction
4.2.1 The estimation of minimum pay in government is the first step towards building its pay structure. In doing so, the approach is to ascertain, by using the most logical and acceptable methodology, what the lowest ranked staff in government needs to be paid to enable him to meet the minimum expenditure needs for himself and his family in a dignified manner.
Minimum Pay Estimated by the V and VI CPC
4.2.2 In making this assessment various methodologies are possible, and have been considered by different Pay Commissions. The V CPC adopted the ‘Constant Relative Income Approach’ to estimate the minimum pay. This approach is based on the principle that the real minimum pay must grow in tandem with real per capita income so that the compensation of government staff is not independent of the economic realities of the country. Accordingly the V CPC proceeded from the minimum pay of Rs.750 estimated by the IV CPC as on 01.01.1986 and added to it the DA of Rs.1,110 to arrive at the ‘price protected’ minimum pay of Rs.1,860 as on 01.01.1996. To this a step up of 30.9 percent was applied, the percentage being the real increase in the per capita income (per capita net national product at factor cost) during the period 1986-95. After rounding off, the minimum pay was arrived at Rs.2,440 as on 01.01.1996, which was subsequently increased to Rs.2,550 at the implementation stage.
4.2.3 To estimate the minimum pay in the government, the VI CPC used the norms set by the 15th Indian Labor Conference (ILC) in 1957 to determine the need-based minimum wage for a single industrial worker. The norms set by the ILC are as below:
i. A need-based minimum wage for a single worker should cover all the needs of a worker’s family. The normative family is taken to consist of a spouse and two children below the age of 14. With the husband assigned 1 unit, wife, 0.8 unit and two children, 0.6 units each, the minimum wage needs to address 3 consumption units;
ii. The food requirement per consumption unit is shown in the Annexure to this chapter. The specifications were derived from the recommendations of Dr. Wallace Aykroyd, the noted nutritionist, which stated that an average Indian adult engaged in moderate activity should, on a daily basis, consume 2,700 calories comprising 65 grams of protein and around 45-60 grams of fat. Dr Aykroyd had further pointed out that animal proteins, such as milk, eggs, fish, liver and meat, are biologically more efficient than vegetable proteins and suggested that they should form at least one-fifth of the total protein intake;
iii. The clothing requirements should be based on per capita consumption of 18 yards per annum, which gives 72 yards per annum (5.5 meters per month) for the average worker’s family. The 15th ILC also specified the associated consumption of detergents, which can be seen in the Annexure;
iv. For housing, the rent corresponding to the minimum area provided under the government’s industrial housing schemes is to be taken. The 15th ILC kept it at 7.5 percent of the total minimum wage;
v. Fuel, lighting and other items of expenditure should constitute an additional 20 percent of the total minimum wage.
4.2.4 The VI CPC considered additional components of expenditure to cover for children’s education, medical treatment, recreation, festivals and ceremonies. This followed from the Supreme Court’s ruling in the Raptakos Brett Vs Workmen case of 1991 for determination of minimum wage of an industrial worker. The Supreme Court had prescribed this amount at 25 percent of the total minimum wage calculated from the first five components. However, in considering this additional component the VI CPC took note of the educational allowance and medical facilities being provided by the government. Based on its calculations the VI CPC arrived at a minimum wage of Rs.5,479. This was enhanced byabout 22 percent to Rs.6,660,which was recommended as the minimum pay in the government. The enhancement quantified the skill factor that Group D staff would acquire through training, upon their merger into Group `C’. Ultimately, at the implementation stage, the minimum pay was fixed at Rs.7,000 per month on 01.01.2006.
Demand made by JCM-Staff Side to the Commission
4.2.5 In its representation the JCM-Staff Side has submitted that the Commission must determine a ‘need-based minimum pay,’ estimated entirely from the ILC norms and factoring in the 1991 ruling of the Supreme Court to provide for education, medical, recreation, festivals and ceremonies. In addition they have also sought the inclusion of a quantified skill factor on the lines of the VI CPC’s approach for addressing the merger of the Group D staff into Group `C’. They have further stated that unlike the previous CPCs, the Commission should not exclude any of the seven components (five ILS components + additional 25 percent provisioning + skill factor) on the apprehension that it would impose a heavy financial burden on the government.
4.2.6 Based on the various components of the ILC norms and the subsequent additions the JCM -Staff Side has reported that the minimum pay should be Rs.26,000 per month, as on 01.01.2014, the date from which it wants the Commission’s recommendations to be implemented. The prices used for the calculation are stated to be the retail prices prevailing in New Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Bhubaneswar, Trivandrum and Bangalore, as on 01.01.2014. The JCM-Staff Side has argued that this estimation of minimum pay is still on the lower side. This is on the basis of their argument that the 15th ILC norms need to be revised for including old and dependent parents as additional consumption units.
Approach of the Commission
4.2.7 The 15th ILC norms were formulated in 1957. As such, the I CPC, which gave its recommendations in 1948, pre-datedthe same.TheIICPCdid makeaninitial assessmentusing the ILC norms. However, it moderated the minimum pay so calculated in line with the then prevailing per capita income. The IIICPC adopted a modified version of the norms to calculate the minimum pay. The IV CPC estimated the minimum pay by applying the growth of total emoluments index on the minimum pay estimated by the III CPC. As already discussed, the V CPC estimated the minimum pay through the ‘Constant Relative Income Approach’ whilst the VI CPC adopted the 15th ILC norms to arrive at a base figure, to which was added additional 25 percent for various additional items plus the skill factor. The Commission has thus noted that directly or indirectly, the ILC norms have always been at the core of the minimum pay calculations made by the previous Pay Commissions. The Commission is also of the view that the ILC norms, along with other supplements (the entire set of seven components), are the best approach to estimating the minimum pay as it is a need-based wage calculation that directly costs the requirements, normatively prescribed to ensure a healthy and a dignified standard of living.
4.2.8 The Commission has estimated the minimum pay (the calculations for which have been tabulated in the Annexure) through the following steps:
Step 1: The food, clothing and detergent products listed and their respective quantities specified by the 15th ILC have been adopted. These quantities indicate the monthly consumption of the listed products by a family comprising three consumption units. [For e.g. for the product ‘Dal’ the quantity specified for daily consumption is 80 grams per consumption unit per day. The monthly consumption of Dal by a consumption unit thus works out to 2.4 kg (80 x 30). Accordingly the monthly consumption of Dal by a family comprising 3 units is 7.2 kgs (2.4 x 3).]
Step 2: The quantities have been multiplied by their respective product prices to arrive at product wise cost. The price adopted for each product is the average of prices of various items that are included in the product. The price of an item is the average of its prices prevailing in each month from July, 2014-June, 2015. [At monthly family consumption of 7.2 kg theCommission has estimated the monthlyexpenditureon Dal at Rs.704.44 after calculating the price of Dal at Rs.97.84 per kg. The price of Dal has been calculated as the average of prices of Toor, Urad and MoongDal items specified under the product Dal and whose prices have been determined at Rs.87.86, Rs.109.66 and Rs.96.00 respectively. The prices of these three Dal items are the twelve monthly average prices for the period July, 2014–June, 2015.]
The prices of all items have been sourced from Labor Bureau, Shimla. These prices are used in the calculation of the CPI (IW) and subsequently the calculation of Dearness Allowance. In the current exercise the prices of all items are for the period July 2014-June 2015 and have been used in the calculation of DA at 119 percent operative from 01.07.2015.
Step 3: The cost of food, clothing and detergent products obtained from Step 2 has been divided by 0.8 to arrive at a total, of which 20 percent provides for fuel and lighting expenses. This addresses the fifth component under para 4.2.3. The fourth component on housing under para 4.2.3 has not been addressed at this stage as its quantification at the final stage of pay estimation is considered more appropriate by the Commission.
Step 4: The cost estimated from Step 3 is divided by 0.85 to arrive at a total, of which 15 percent is towards recreation, ceremonies and festivities. The prescribed provision of 25 percent to cover education, recreation, ceremonies, festivals and medical expenses has been moderated to 15 percent because expenses on educational and medical necessities are being separately provided for through relevant allowances and facilities and thus need not be provided here. This partially addresses the first of the two components outside the 15th ILC norms.
Step 5: The cost estimated from Step 4 is increased by 25 percent to account for the skill factor, following the reasoning that there is no unskilled staff in the government after the merger of Group D staff in Group `C’. This addresses the second of the two components outside the 15th ILC norms.
Step 6: The cost estimated from Step 5 is divided by 0.97 to arrive at a total, of which 3 percent provides for housing expenses. This is done in view of the observation that license fees for government accommodation is about 3 percent of the total pay. This addresses the fourth component stated under para 3 but partially so, as the 15th ILC norms had fixed the housing provision at 7.5 percent.
Step 7: The cost estimated from Step 6 is as on 1 July, 2015 when the DA was 119 percent. The DA is assumed to be 125 percent as on 1 January, 2016, the day from which the Commission expects its recommendations to be implemented by the government. Accordingly the cost estimated from Step 6 has been increased by 3 percent (2.25/2.19 = 1.027 or nearly 3%).
4.2.9 The cost estimated from Step 7 is next rounded off to Rs.18,000, which is the minimum pay being recommended by the Commission, operative from 01.01.2016. This is 2.57 times the minimum pay of Rs.7,000 fixed by the government while implementing the VI CPC’s recommendations from 01.01.2006. Accordingly, basic pay at any level on 01.01.2016 (pay in the pay band + grade pay) would need to be multiplied by 2.57 to fix the pay of an employee in the new pay structure. Of this multiple, 2.25 provides for merging of basic pay with DA, assumed at 125 percent on 01.01.2016, while the balance is the real increase being recommended by the Commission. The real increase works out to 14.2 percent (2.57÷2.25 = 1.1429). The following table shows the real increase given by each CPC/Government over the previously set minimum pay:
( in percent)
| II CPC | 14.2 |
| III CPC | 20.6 |
| IV CPC | 27.6 |
| V CPC | 31.0 |
| VI CPC | 54.0 |
| VII CPC | 14.3 |
4.2.10 The real payin government is protected byproviding Dearness Allowance (DA), which is that percentage of pay by which the CPI (IW)16 increases over a fixed base value.
-----------------------
16 CPI (IW) is Consumer Price Index for Industrial Workers maintained by Labour Bureau, Shimla.
Consequently the absolute amount of DA keeps on growing with every point increase in CPI (IW). On the other hand the real value of the industrial minimum wage is protected by providing Variable Dearness Allowance (VDA), which is a fixed amount of money given per point increase in CPI(IW) as notified bythe Chief Labour Commissioner (central sphere) from time to time. Consequently, over a period of time, the minimum pay + DA in government becomes larger than the minimum wage + VDA in the private sector even though the basic minimum wage in both the sectors is calculated on the basis of the 15th ILC norms. As on 01.01.2015 the minimum payin government was Rs.14,910 whereas minimum wage for askilled worker was in the range of Rs.9,000–Rs.11,000 per month.
4.2.11 Besides DA, government provides house rent, transport, location and function specific allowances besides Leave Travel Allowance (LTA) which, along with the basic pay, constitute the gross pay of a government employee. If one were to only take HRA at 30 percent of the basic pay and transport allowance at Rs.400+DA, as are admissible in A1/A class cities, together with educational allowances for two children at the rate of Rs.1,500 per month, the gross pay further increases to Rs.20,870 (20870 = 14910 +2100+860+3000) as on 01.01.2015. In addition government gives a host of other benefits that can be measured under the CTG (Cost to Government of an employee) concept. From these numbers it is clear that benefits given to the lowest ranked government employees, whether monetized or not, are significantly higher than the minimum basic pay and also much higher than the emoluments of skilled industrial workers.
4.2.12 To obtain a comparative picture of the salaries paid in the government with that in the private sector enterprises the Commission engaged the Indian Institute of Management, Ahmedabad to conduct a study. According to the study the total emoluments of a General Helper, who is the lowest ranked employee in the government is Rs.22,579, more than two times the emoluments of a General Helper in the private sector organizations surveyed at Rs.8,000-Rs.9,500.
4.2.13 After considering all relevant factors the Commission is of the view that the minimum pay in government recommended at Rs.18,000 per month, w.e.f. 01.01.2016, is fair and reasonable and one which, along with other allowances and facilities, would ensure a decent standard of living for the lowest ranked employee in the Central Government.
Annexure to Chapter 4.2 Calculation of Minimum Pay as on 01.01.2016 by the Commission | |||||||
P e r dayPCU
| Unit |
P e r month3 PCU
| Unit |
P r ice/Unit (Rs.)
|
Expenses(Rs.)
| ||
| 1. | Rice/Wheat | 475 | gm | 42.75 | kg | 25.93 | 1108.30 |
| 2. | Dal (Toor/Urad/Moong) | 80 | gm | 7.20 | kg | 97.84 | 704.44 |
| 3. | Raw Vegetables | 100 | gm | 9.00 | kg | 58.48 | 526.28 |
| 4. | Green Vegetables | 125 | gm | 11.25 | kg | 38.12 | 428.85 |
| 5. | Other Vegetables | 75 | gm | 6.75 | kg | 32.80 | 221.42 |
| 6. | Fruits | 120 | gm | 10.80 | kg | 64.16 | 692.93 |
| 7. | Milk | 200 | ml | 18.00 | litre | 37.74 | 679.26 |
| 8. | Sugar/Jaggery | 56 | gm | 5.04 | kg | 37.40 | 188.48 |
| 9. | Edible Oil | 40 | gm | 3.60 | kg | 114.02 | 410.46 |
| 10. | Fish | 2.50 | kg | 268.38 | 670.95 | ||
| 11. | Meat | 5.00 | kg | 400.90 | 2004.51 | ||
| 12. | Egg | 90.00 | no. | 4.27 | 383.98 | ||
| 13. | Detergents etc | Rs./month | 291.31 | 291.31 | |||
| 14. | Clothing | 5.50 | meter | 164.88 | 906.83 | ||
| 15. | Total (1-14) | 9217.99 | |||||
| 16. | Fuel, Electricity, Water Charges | 2304.50 | |||||
| 17. | Total-(15) d ivided by 0.8 | 11522.49 | |||||
| 18. | Marriage, Recreation, Festivals, etc. | 2033.38 | |||||
| 19. | Total-(17) divided by 0.85 | 13555.87 | |||||
| 20. | Provide for Skill by adding 25% to (19) | 3388.97 | |||||
| 21. | Sum (19+20) | 16944.84 | |||||
| 22. | Housing @ | 524.07 | |||||
| 23. | Total-Divide no.21 by 0.97 | 17468.91 | |||||
| 24. | Step up of 3% on No.23 as DA is projected at 125% on 01.01.2016 | 524.07 | |||||
| 25. | Final Minimum Pay as on 01.01.2016 (23+24) | 17992.98 | |||||
| 26. | Rounding off | 18000 | |||||
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