Submitted a memorandum for correcting the negative and unwanted recommendations of 7th CPC - BPEF

Submitted a memorandum for correcting the negative and unwanted recommendations of 7th CPC -BPEF

BHARATIYA POSTAL EMPLOYEES FEDERATION
BPEF & GENC ( Affiliated to BMS)

MEMORANDUM

GENC/7th C.P.C./Examination/ Recommendation /2015

Dated: 10-12-2015

To
Shri Jitender Singh Ji
Hon’ble Minister of MOS
Ministry of Personnel Public Grievances & Pension
Govt. of India
New Delhi – 110 001

Sub: Suggestion over various negative recommendations of 7th C.P.C. to Govt of India for correction of the same to the advantage of Employees and for the sake of constitutional provisions. –regarding..

Respected Sir,

The Government Employees National Confederation studied the report containing the recommendations of Seventh Central Pay Commission and observed that although there are some positive recommendation in it but also there are several instances came to notice the sprit and promises made by Chairman Shri A.K. Mathur as mentioned in para 1.29 that Govt. services are not merely only contract but is a status and employees expect fair treatment from the Govt. are not reflected in the recommendations properly. Some recommendations are negative to extent that they went against the constitutional rights of the employees. Few of them are :

(1) It tried to rationalize the Pay structure by devising “Index of Rationalization “but ended with several unwanted discrepancies.

(2) It is the fact that the Allowances were allowed by Departments as per their operational & administrative needs, but 7th C.P.C. on its own initiative has declared them “outlived their utility “and recommended for their discontinuance.

(3) Vide para 1.17 it expresses its views that status in society due to becoming a Govt. employee cannot be monetized. The commission has erred in considering the fact that the status requires money to maintain it. It wrongly computed consumption units of a normative family as per present policies towards women, Children and senior parents and, therefore, could not arrive at correct minimum salary demanded.

(4) It says that the concept of Grade Pay and pay Band has been done away and all grade pay at all levels has been subsumed into the pay matrix but has also done away with the promotional benefit of difference of Grade pay provided earlier on promotion and restricted itself to recommend only 3% increment on promotion.

(5) Vide para 9.1.1 it remarked that with increased salary packages these advances have lost their relevance and recommended that all 12 interest free advances like Medical, LTC, Cycle etc. should be abolished without considering its validly to the employees, its family and the Govt. policies towards extension of these advances.

(6) By recommending increase in bench mark to “very good” for grant of MACPS benefits and recommending stoppage of further increment for not attaining it depicts criminal action over the employees for his no fault .

G.E.N.C. suggestions

1. Deficiency in PAY MATRIX

Although the intentions and promises made in Para 5.1.1 of 7th CP.C. are “simplification and rationalization” ,the 7th C.P.C. has wrongly taken up the entry pay for each grade pay devised by 6th CPC as the basis of rationalization and a “ index of renationalization” have been formed which is , for PB-I it is 2.57, for PB-2 it is s 2.62 , for PB-3 it is 2.67. It is amazing that at one hand 7th CPC says that the entry pay designed by 6th C.P.C. was disproportionate and on other hand chooses same for future rationalization in the form of recommended pay matrix.

Therefore, the G.E.N.C makes question that how a disproportionate entry pay, after going through process of rationalization through Index of rationalization .

1. Will produce equidistant levels as promised ?
2.  Will produce a judicious and caring horizontal matrix of entry pay of each level containing the exact compensation to Qualification, skill set required as well as increasing roles and responsibilities at each step of level?
3. Will produce Proportionate increase in quantum of pay as promised in para 5.1.19?
4. Will produce Levels, as status determiner as mentioned in para 5.1.18?
5. Will Satisfy holistic approach of 7th pay commission towards salaries allowances and other perquisites of compensation structure at each level as promised in para 1.18.

In view of all above questions, the G.E.N.C. is proposing following modification while devising New pay matrix

(a) The Index of rationalization may be 15% enhancement in each 18 levels starting from G.P. 1800 and moving up to PB-3 onward instead of proposed disproportionate Index of rationalization of 7th C.P.C.

(b) After devising Pay matrix as above, the Post existing is G.P. 1900 may be merged with G.P. 2000 and similarly G.P. of 2400 may be merged with G.P. of 2800 as a provision of rationalization of Grade Pay in General. This method has been recommended by 7th C.P.C. to general commercial cadre existing in Ministry of Railways.

By 7th CPC				By G.E.N.C
G.P.	Group of posts	Quantum of Entry .Pay. Proposed by 7th CPC	Percentage increase in pay with respect of previous  level	Quantum of Entry .Pay. Proposed  by GENC	Percentage increase  in pay with respect of   previous level
1800	C	18000		18000	–
1900	C	19900	10.5%	21000	15%-
2000	C	21700	9%	24150	15%
2400	C	25500	17%	27772	15%
2800	C	29200	12%	31937	15%
4200	B	35400	21%	36727	15%
4600	B	44900	26%	42236	15%
4800	B	47600	6%	48671	15%
5400 PB-II	B	53100	11.55%	55911	15%
5400 PB-III	A	56100	5.6%	64366	15%

For others level the same method can be adopted , if deemed fit. The GENC has taken up this rationalization up to cadre in which direct recruitment takes place.

2.MINIMUM PAY :
The minimum pay computed by 7th CPC vide Table Annexed to Chapter 4.2 needs careful modification as below.

1. The rates mentioned as par 4.2.8 are taken as per product prices. Here, it is to say that any consumer has to buy the products at retail prizes which are always ahead of these product prizes because of middle man profit , sales tax , VAT etc. which when combined are at least ahead by 12% of product prize.

Therefore, adding 12% of 18000 i.e. 2160 to 18000 makes minimum wage of three consumption unit Rs. 20160. On this basis, the share of one consumption unit comes out to be Rs. 6720

2. Several initiatives from side of Govt. has come forward these years with respect to women, Children & senior parents which are necessary to be included in the consumption unit as given by Doctor aykroyd . They are

(a) Senior Citizen and parents maintenance Act 2010 which provides liability of Mother and Father over employed Sons/Daughters.

(b) Gender bias reflected in ackroyed formula in respect of women employees as well as house wife, mother is not acceptable as per Govt. policy. The provisions of full unit for these dependents are to be included in consumption unit.

(c) Full consumption unit to Children below age 14 has to be made compulsory as the present day Govt. is health sensitive, therefore, we have to consider that the quantity and prizes of commodities used by children is much higher than commodities used by adults.

(d) Dating back to First CPC the lowest entering Govt. employee was mere 5th pass but as per the recommendations of 6th CPC, accepted by Govt., the lowest employee being inducted into Govt. service is 10th pass. Therefore mental labour of this skilled employee has also to be considered and monetized.
By computing all factors mentioned in 1 and 2 above following computation from minimum wage comes out

(i) 20160 minimum wage arrived at 1 above divided by 3 makes Rs. 6720 as full unit consumption.

(ii) Employee, wife, two Children below 14, Mother, & Father makes 6 consumption unit of newly recruited MTS in the Govt. sector.

(iii) Therefore, as per (i) & (II), Rs. 6720 X6 equals to Rs. 40320

(iv) 25% of 6720 i.e. 1680 being mental labour for 10th pass MTS, has to be added to Rs. 40320 above .

(v) Therefore , Rs. 40320 + Rs.1680 equal to Rs. 42000 as minimum wage.

The Govt. may also consider and arrive at the minimum wage on the basis of NET NATIONALPER CAPITA INCOME (neutralized inflation ) data of CSO ( Central statistical organization ) which is Rs. 6175 per consumption unit.

However, keeping in view the paying capacity of employees and economic situation of newly developing country of India, the GENC is proposing Rs. 24000 as minimum wage to a newly recruited employee.

3. FITMENT BENEFIT : Fitment benefit provided by the 7th C.P.C. is 2.57 which is 14.29 % more than 2.25. equivalent to the fitment benefit provided by 2nd CPC .

The GENC, therefore, demands that it should not be less than 51% of 2.25 as provided by 6th CPC. Which comes out to be 3.42.

4. INCREMENT AT THE TIME OF PROMOTION :
The GENC intends to remind you that the employees are getting only 3% replacement benefit in new pay Matrix on promotion. Previously the employees were getting 3% benefit along with difference of grade pay on promotion.
Therefore, we suggest that:-

(i)On each promotion, one extra increment in that promotional level may be provided. OR
(ii)The pay in new pay matrix may be fixed by providing one extra increment in the concerned level.

5. ANNUAL INCREMENT RATE : The Annual increment Rate provided by previous C.P.C. were calculated when pay scale system was prevalent and age for full pension was 33 years. In worst cases an employees with 3% increment Rate can reach to maximum from minimum in 33 years.

The 6th CPC has also endorsed the concept of 3% annual increment in pay band system but has suggested full pension in 20 years . This recommendation was later on accepted by Govt. and revision in pension rules were made accordingly.

Now it was turn of 7th CPC to take into account above facts and, therefore, would have devised annual increment of 5% considering that the employee in new pay matrix will reach in 20 Years for full pension benefit . Unfortunately this has not been done.

Therefore, in order to have coordination between previous and present criterion for providing increment on the basis of pension computation, the 5% annual increment rate may be considered to devises new pay Matrix.

6. Date of Annual Increment:- With present formula that each employee completing 6 months in a year will get increment, on 1st July. The concept of 1st July of year is not adequate for those entering in the service in any month between January and June & for those retiring any of the month of the year. Therefore, the GENC proposes that both type of above employees may be provided one increment irrespective of date of entry or date of retirement. Similarly, two dates i.e. 1st January or 1st July can be made for assessing and providing annual increment.

7.With holding of Annual increment to Non performer after 20 years – increase in MACPS benchmark and introducing efficiency Bar. Vide para 5.1.46 “there is a vide spread perception that increment as well as upward movement in the hierarchy happens as a matter of course. Also, grant of MACP is taken for granted. “

These lines are totally against the promises of Shri A.K Mathur Chairman 7th CPC quoting apex court judgement in para 1.29 “ it should always born in mind that legitimate aspirations of an employee are not gullitoned and a situation is not created where hopes ends in despair. Hope for everyone is gloriously precious and that a model employer should not convert it to be deceitful and treacherous by playing a game of chess with their seniority also vide para 1.30 it quotes that the employee should not be thought as criminal and unnecessary suspicion should not be made about him.

On availability of such sprit and promises, the bench mark “ Very good” should not be taken in a way that “average” and “good “remark are criminal activities and without any disciplinary proceeding their annual increment can be withheld. Similarly these remarks cannot declare employee a non performer. The GENC, therefore, request that the para 5.1.45 pertaining to MACPS & para 5.1.46 pertaining to efficiency Bar may not be considered for implementations. .

8.MACPS : (1) The 7th CPC has compiled the key demands received by it and quoted regarding MACPS demand in 5.1.12 (e) that the MACPS providing benefits in grade pay hierarchy, was giving in adequate benefit after long gap of 10, 20 & 30 Years and demanded that, it should be provided in promotional hierarchy instead of grade pay hierarchy. Similarly, the demand for increase in the frequency of administering MACP has also came for consideration. .

In view of all above, the 7th C.P.C. restricted itself to recommend that the frequency of MACP will remain 10, 20 & 30 years but in process to provide adequate MACPS benefits , it recommended , that it will be provided in immediate next level in the hierarchy.

The GENC is trying to analyze the words immediate next level in the hierarchy and concludes that it should simply mean the immediate next level in the hierarchy existing in the department.

After going through entire recommendation it has been observed that the word hierarchy was used for hierarchy existing in the department or a cadre. In case the meaning of immediate next level in the hierarchy is level hierarchy then It can be said that 7th CPC has not done there any modification in the MACPS scheme and it only tried by deceitful and treacherous method to take away the benefit as promised.

Therefore, the GENC strongly demand that the word immediate next level in the hierarchy may be made clearer so that it may mean immediate next level in the cadre / promotional hierarchy.

(2) Similarly, recommendation of stepping up has been made by 7th CPC in its para 11.40.82 in respect of Railway Accounts for MACPS anomalies.

Therefore the GENC strongly demand that the stepping up of pay of senior for MACPS anomalies with Junior to all seniors drawing lesser pay than junior in entire Central Govt. Employees may be made. It is to remind that MACPS scheme is common to all and is not restricted to any cadre or Department.

9.House Rent Allowance: The factor of 0.8 has been introduced illogically and without any justification. This factor should be removed & H.R.A. should be to restored on the basis of Metro and Non metro classification of cities only with percentage 40 & 30 respectively .

10.CGEIS Benefit : Many banks especially corporation Bank of India is providing Insurance cover on natural death over salary account to the tune of 10 to 20 Lacks . Therefore, it is not advisable to increase the Insurance Benefit heavily and also its premium.

If saving fund is the basis of this increase in CGEIS premium then all New entrant may be allowed for G.P.F. contributions.

11. Child Care leave: This leave for all two years may be granted with full salary. Its benefit should also be extended to Male employees.

12.Medical Advances : As the terms of Children Education Allowance and Traveling Allowance were made easier , the terms of Medical Advance may also be made easier and advances up to 1 lacs amount should be allowed to be sanctioned by the Head of the office instead present 10 thousand ceiling.

13. Leave Travel Concession:- should be allowed exactly on same terms as it is presently. It is to remined that the facilities was devised to boost up the tourism Industry and also to get relief to the employees and its family from getting tired due to routine work.

14. Bonus: Bonus in all forms may be continued as it is considered as deferred wage.

15. Income Tax issues: Present limit of income tax may be enhanced to 2.57 times . All allowances of Central Govt. employees may be kept out from preview of Income tax. The Pension amount should be exempted from tax .Death cum retirement gratuity should be exempted form income tax.

16. Fitment benefits of to decide quantum of minimum pension: should be equal to minimum wage and fitment benefit of 2.57 may be increased to 3.

17. Allowances: All Allowances were devised as per requirement of existing Govt. policies and conditions of service in the Department. Therefore, any decision taken abruptly is certainly going to produce unrest. The GENC quotes certain allowances that are certainly to be restored and instead its rate should also be enhanced and rationalized.

Assisting Cashier Allowance , Caretaking Allowance , Family planning Allowance , FMC, Funeral Allowance, Ghat Allowance , Handicapped Allowance, Head quarter Allowance, Kit Maintenance Allowance., ,Over times Allowance, Rent free Accommodation, Risk Allowance , Training stipend , Treasurer Allowance Washing allowance , Cash Handling Allowance ., Cycle Allowance etc.

18.Compassionate Appointment: Ceiling of 5% over DR vacancies imposed over Central Govt. employees at the time of compassionate appointment may be removed and it may be made 100%

19. Gramin Dak Sewak: GENC demands that Negative recommendation of 7th C.P.C. to treat GDS a non Govt. employees to the extent that their salary may be separated from salary other regular employees being drawn from consolidated fund of India may be expunge out from recommendation of 7th C.P.C. as Department of Posts has already constituted a GDS committee to look into to all service condition and employment matters in entirety.

20. New Pension Scheme: It is to emphasis that Article 366 (17) defines Pension. On its basis AIR 1983 SC 130 held that Pension is not an exgratia payment but it is payment of past services rendered. Similarly, Supreme Court reiterated that pension is not a bounty of state. It is earned by the employees for services rendered to fall back upon after retirement. It is attached to the office it cannot be arbitrarily denied.
In a judgement in U.O.I. & others (1990) 4 SSC 207) – It was never held that both the pension retiree and PF release form a homogeneous class and that any further classification among them would be voilative of Article -14.

The 7th CPC held that under the pension scheme, the Govt. obligation begins on his retirement and then continuous till the death of employees. In Para 10.1.64 the 7th CPC quotes there is clear evidence that Govt. has progressively moved towards liberalized regime for past pensioners. The 6th CPC has provided additional pension and 7th CPC has provided one Rank one pension.

Unfortunately no promise has been made by the 7th CPC. But vide para 10.3.3 it quotes that the commission notes that the NPS is the culmination of a series of social securities and pension related reforms initiatives in India . At present OASIS has concluded that instead of defined benefit scheme for pension , the defined contribution scheme should be introduced. In NPS 40% of accumulated wealth is invested for pension purpose and 60% is paid at the time of retirement. NPS is not covered in GPF. On the death of employee 80% wealth is utilized for purchase of annuity and 20% is paid to legal heir.

7th C.P.C. Vide para 10.3. clearly speaks that uncertainty over the NPS scheme should be removed. Therefore the BPEF suggest that

1.The quantum of pension should be made equivalent to old pension scheme and this decision may be notified along with 7th C.P.C. recommendations.
2.The amount of gratuity for NPS should be made equal to old pension.
3.Family pension & other benefit to the NPS employees should be declared along with 7th CPC recommendations.

With regards and hopes for positive correction

Yours sincerely

Sd/-
( Sadhu Singh )

Source: bpefsg.blogspot.in
7CPC, 7th CPC News, 7th CPC Report, Allowance, BMS, BPEF, FITMENT BENEFIT, HRA, Increment, MACPS, Minimum Pay, Pay matrix, Pay Structure, recommendations of 7th CPC

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7th Pay Commission: Private sector employees want similar hikes

New Delhi: Following the 7th Pay Commission report, there is a significant discontent among private sector employees, and employers are dealing with lowered motivation and performance levels, says a survey.
According to a TimesJobs.Com survey, over 70 per cent private sector employees regret working in the private sector after central government employees bag 23.55 per cent salary hike.

“The discontent caused in the private sector by this performance-indiscriminate hike to central government employees is palpable. And India Inc employers are having to face the brunt of this dissatisfaction with lowered motivation and performance levels,” TimesJobs.Com COO Vivek Madhukar said.

A large majority of respondents (68 per cent) felt that this hike was “unfair”. Another 47 per cent respondents believe the raise has no linkage to employee performance while 30 per cent feel the massive hike will eventually widen the public and private sector income disparity.

While the disappointment with private sector pay scales was high across experience levels, entry-level employees were the most disappointed.

About 80 per cent junior/entry-level employees said they regretted having taken up jobs in the private sector, reveals the survey. Nearly 75 per cent middle and senior-level employees also shared similar sentiments.
“All (100 per cent) the professionals surveyed said private sector companies should increase minimum wages like the central government,” the survey noted.

However, most private sector employees agreed that their jobs offered them more room for career growth. Close to 80 per cent employees think private sector jobs score better over government jobs given the opportunities for growth and job change.

The survey covered over 700 professionals working in the private sector from across the country, who earn their increments based on their individual performance and contributions to the business. It had representation from employees from across sectors and experience levels.

PTI

Revision in fare of Children w.e.f. April, 2016: Railway Board Commercial Circular No. 71

Revision in fare of Children w.e.f. April, 2016: Railway Board Commercial Circular No. 71

GOVERNMENT OF INDIA
MINISTRY OF RAILWAYS
(RAILWAY BOARD)

COMMERCIAL CIRCULAR. NO.71 OF 2015

No.TC II/2910/98/Child Fare

New Delhi, dated 02.12.2015

The General Managers(Comml.),
All Zonal Railways

Sub:- Revision in the Rule 211 of IRCA Coaching Tariff No.26 Part I (Vol. I): Fare for children.

In partial modification of provisions contained in Rule 211 of IRCA Coaching Tariff No.26 Part I (Vol.I), Ministry of Railways have decided that in case of children of age 5 years and under 12 years of age for whom full berth/seat ( in Reserved class) is sought at the time of reservation, full adult fare for such child shall be charged. However, if berth/seat is not sought for the children of age 5 years and under 12 years of age at the time of reservation, then half of adult fare shall continue to be charged subject to minimum distance for charge.

2. There shall be no change with regard to child fare for unreserved class.

3. The revised child fare rule shall be applicable with effect from 10.04.2016. CRIS may carry out necessary changes in the software and testing well before 10.12.2016.

4. Necessary changes shall be carried in the reservation form so that the passenger can mark their option for requirement of full berth/seat for child or not.

5. Special arrangements shall be made to ensure that necessary instructions should reach the staff well in time. Steps should also be taken to ensure that the staff fully understand these changes and implement them properly.

6. This Issues with the concurrence of Finance Directorate of Ministry of Railways.

7. Zonal Railways shall ensure that wide publicity is given through the press, media and also through notifications and announcements at stations.

Sd/-
(Rohit Kumar)
Dy. Director Traffic Commercial-II
Railway Board

Signed Copy click here

Establishments of Kendriya Vidyalayas

Establishments of Kendriya Vidyalayas

Press Information Bureau
Government of India
Ministry of Human Resource Development

Dated: 10.12.2015

Establishments of Kendriya Vidyalayas

Kendriya Vidyalayas (KVs) are meant primarily to cater to the educational needs of the wards of transferable / Non-transferable employees of Central Government, State Governments, autonomous bodies, public sector undertakings and Institutes of higher learning. If seats remain vacant after giving admissions to the wards of employees mentioned above, these vacant seats are given to children of other categories.
Proposals for opening of new KVs are considered only if sponsored by Ministries / Departments of the Government of India or State Governments / Union Territories Administrations or Organization of employees belonging to the eligible categories thereby committing resources for setting up a new KV, and are subject to availability of resources with the Central Government. The Government of India had conveyed sanction for setting up of 54 new KVs in the country on 04.03.2014. Out of these, 32 KVs have been made functional so far. The state/UT-wise details are given in Annexure.

Across the country, States are being supported through the schemes including Sarva Shiksha Abhiyan and Rashtriya Madhyamik Shiksha Abhiyan to design and implement comprehensive quality improvement programmes to bring about overall changes in the teachers training, curricula, learning materials, learning processes, learning outcomes, assessment and monitoring systems in order to ensure that the quality of teaching learning is improved.

This information was given by the Union Human Resource Development Minister, Smt. Smriti Irani today in a written reply to a Rajya Sabha question.

PIB

7TH PAY COMMISSION REPORT: Pay Panel bonanza: Boon or bane?

7TH PAY COMMISSION REPORT: Pay Panel bonanza: Boon or bane? 

On November 19 when Justice AK Mathur submitted the 900-page Seventh Pay Commission report to Finance Minister Arun Jaitley there were smiles on the face of 48 lakh Central Government employees and 55 lakh pensioners. However, amid all the ecstasy and celebrations, economists are divided in their opinion over the impact of an additional Rs 1.02 lakh crore burden on India’s economy at a time when the Government is struggling to cut its fiscal deficit. So will the 7th Pay Panel report be a boon for the BJP-led NDA-II Government or the move will boomerang on it like the “India Shining” campaign of the NDA-I regime? Bureaucracy Today analyses the issue.

The proposed 23.55 percent hike in the salaries and pensions of Central Government employees has alarmed a section of economists, ratings agencies and brokerages which warn of a dent in India’s finances though the other section and the Government express confidence that the fiscal deficit targets will not be breached.

The Commission has proposed a new pay matrix, replacing the existing pay bands and grade pay, for the Central Government employees and pensioners, with a monthly starting pay, inclusive of dearness allowance (DA), of Rs 18,000 and an apex level pay of Rs 2.5 lakhs. The starting pay now is Rs 7,000 per month and the highest salary is Rs 90,000 (fixed) excluding the DA which is 119% at present.


IMPACT ON FISCAL DEFICIT
Ratings agency Fitch says the recommendations, “if implemented in toto, could challenge the Government’s goal of achieving a fiscal deficit of 3.5 percent in 2016-17 unless its expenditure is cut or revenue raised”. Similarly, another international ratings agency, Standard & Poor’s, opines that the implementation of the Pay Panel proposals will “put pressure on the fiscal position of the Government and will act as a constraint to sticking to the roadmap for fiscal consolidation”.

However, former Reserve Bank of India Governor Bimal Jalan feels otherwise. “I don’t think the implementation of the Seventh Pay Commission recommendations will negatively impact the Government’s fiscal deficit. With the increase in employees’ income, consumption will also increase. If the consumption increases, the Government will earn more from Excise Tax, GST, etc. An increase in consumption will lead to an increase in Government revenue,” he tells Bureaucracy Today.

Echoing Jalan’s views, former Revenue Secretary Sunil Mitra says, “Our fiscal deficit is very much in control. Whether the implementation of the Pay Panel recommendations will impact the fiscal negatively, I cannot say. It may not really impact the fiscal deficit because the macro-economic fundamentals in the country are very good at the moment. Other than inflation in some food items, generally the prices are down.”

Earlier in February this year, Finance Minister Arun Jaitley had set the fiscal deficit target for the FY 2015-16 at 3.9 percent of the gross domestic product and said the Government would reduce the target gradually to 3 percent by FY 2017-18.

Brokerage firm Citigroup warns that in the backdrop of the Pay Panel recommendations, the Government might have to “make a cut in public investments” to achieve its fiscal deficit target, offsetting “the gains on economic activity somewhat”.

“The fiscal impact of the Seventh Pay Commission report, as with the previous ones, is likely to be felt over the next two years: 2016-17 and 2017-18,” says Sonal Varma of Nomura, a broking firm, in a research paper.

Seeking to allay the fears, Economic Affairs Secretary Shaktikanta Das says, “The Commission’s report was expected and the Government knew that it would take effect from January 1, 2016. Obviously the Government was not aware of its thinking. But the Government always has a broad estimation of what is going to be the impact of Pay Commission recommendations and accordingly internally a kind of risk matrix is prepared. The Government will deal with the situation. We will work out our numbers. So far as the fiscal consolidation roadmap is concerned, that will be maintained.”

Finance Secretary Rattan Wattal tells Bureaucracy Today, “While there is fear of some revenue shortfall, especially on the direct taxes front, the Government does not want to go in for any expenditure cuts to meet the deficit target. The FY16 plan spending target is realistic and reasonable.”


MORE BURDEN ON PUBLIC?
Though the Government is assuring the nation that the Pay Panel report will not affect the Indian economy, some experts argue that the State exchequer might have to shell out more with the Government likely to impose new taxes to meet its expenditure.

G Chokkalingam, Founder and Managing Director of the Mumbai-based Equinomics Research and Advisory, opines, “The additional income in the hands of Central Government employees will constitute about 0.5 per cent of a projected GDP in FY17 and may not give any boost to consumer goods manufacturers as a major part of this would be chucked away from them by revival in inflation rates and further higher duties (on fuels as long as the oil price remains subdued) and taxes (especially on services) likely to be imposed by the Government to meet its growing expenditure needs.”

However, Bimal Jalan seeks to disagree. “I don’t think that the public has to pay more taxes to meet the expenditure requirement. The impact of the Seventh Pay Panel report on the budget will not be substantial. I would not worry about that part. It is reasonable and can be handled,” the former RBI Governor told Bureaucracy Today.

Madan Sabnavis, Chief Economist of ratings agency CARE, says though the quantum of the recommended increase in the salaries and pensions of the Government employees is justified, the amount is quite large and “absorbing Rs 1 lakh crore is a big task”.


PRESSURE ON STATES
The impact of the SCPC recommendations in all its likelihood will trigger a similar demand in the States, a fact acknowledged even by Jaitley. The Union Finance Minister admitted at a business summit in Jaipur recently that the implementation of the 7th Pay Commission recommendations will put “slight” burden on the States’ expenditure.

Former Revenue Secretary Mitra also opines that though there will be pressure on the State Governments, it won’t be huge. “The State finances are much better than those of the Central Government. I don’t anticipate that SCPC recommendations will have a huge pressure on public finance or for that matter State finances. Most State Governments have improved their finances and are better placed than the Centre on the fiscal front,” Mitra tells Bureaucracy Today.

Echoing his views, Jalan articulates that the SCPC would significantly boost the Centre’s income tax collections which will also benefit the States as the Centre’s gross tax revenue needs to be shared with them.
However, Niti Aayog Member Bibek Debroy vehemently disagrees. “The repercussions of implementing the Seventh Pay Panel report will be serious on the States’ fragile finances. When starved of funds, the State Governments slash capital expenditure and the Pay Panel report will force the States to scale back their development spend,” Debroy tells Bureaucracy Today.

He also says the Railways, which is already reeling under financial constraints, will also suffer as the wages of its staff go up. Of the total Rs 1.02 lakh crore revised salary, the Union Budget will bear Rs 74,000 crore while Rs 28,000 crore will be borne by the Rail Budget.

Debroy’s apprehensions are not unfounded. “Most of the States are working around the 3% fiscal deficit number. Accommodating the additional pay increase would be a touch and go. A few weeks ago the Central Government put forward the Ujwal Discom Assurance Yojana (UDAY) under which the States are to restructure their debt-ridden Electricity Boards (SEBs). This means bearing some additional debt in the next two years. Depending on the timing of their Pay Committee recommendations, if any, the State Governments will have a sticker path to cross as they would have to address the necessity of higher salaries and the option of reforming the SEBs along with other pressures like spending partly on setting up Smart Cities and launching other programmes,” Madan Sabnavis says.


FUTURE UNCERTAIN
Though the Central Government has set up a “cell” to examine the Pay Panel recommendations, ambiguity remains as to how the Government will bring the Rs one lakh crore money to fund the increased salaries. The challenges are at multiple levels and very little has been said in the report about addressing them. The additional expenditure has to be compensated from somewhere. To fulfil the Fiscal Responsibility and Budget Management objective, the Government either has to increase its revenue or cut down its expenditure and this is where the problem lies. It will be a major challenge for the Finance Minister when he presents the FY2016-17 budget in Parliament. It is just a matter of few months before we know how well the Government has worked on its fiscal arithmetic. For the time being, let us hope that the Government does not further bend the back of the common man who is already facing the heat of spiralling prices.

Source: bureaucracytoday.com

MACP scheme for Defence Service personnel – No marked change in 7th CPC Report

MACP scheme for Defence Service personnel – No marked change in 7th CPC Report

Assured Career Progression

The Services have sought four financial upgradations under MACP scheme at 6, 12, 18 and 24 years of service or on completion of six years of continuous service in same Grade Pay. It has been stated that 60 percent of the soldiers (i.e., Sepoys and Naiks) are deprived of the third financial upgradation on account of an early retirement.

Analysis and Recommendations : The Commission has considered the demand and notes that as it is the existing scheme of MACP for the Defence forces personnel, at 8, 16 and 24 years of service, is more beneficial than the one on the civilian side, which is spaced at 10, 20 and 30 years. The aspect of early retirement of the defence services personnel is therefore already factored in. Further, no revision in the MACP scheme is intended on the Civilian side.

Keeping these facts in view the Commission is unable to recommend any changes to the MACP scheme insofar as Defence Service personnel are concerned.

7th CPC recommendations are far beneficial is beyond doubt – Bharat Kumar

7th CPC recommendations are far beneficial is beyond doubt – BHARATH KUMAR

The author of the article Shri. M.Dorai mentions about 32% increase granted as fitment benefit on pay and grade pay excluding D.A. since the VI CPC had granted 40% fitment benefit on basic only excluding D.A.

It appears some readers do not understand what 225% stands for. 225% is the actual pay plus grade pay and D.A. as on 1/1/2016 which we actually will be drawing under 6th CPC pay pattern. Out of 225%, 100% denotes Basic+ Grade Pay, the additional 125% stands for D.A. as on 1/1/2016(present D.A. as on 1/7/2015 is 119% + 6% as on 1/1/2016=125%), totalling to 225%. +32 (32% fitment on pay+Grade pay) = 257(2.57 factor).

The readers of the article are wrongly multiplying 32% on 225%(2.25 factor) which include 125% D.A instead of multiplying 32% on Pay in the pay band and grade pay i.e. 100 x 32 = 32% which should be added to 100% Pay and Grade Pay and 125% D.A totalling to 257 i.e.100% existing basic pay comprising pay and grade pay + 32% fitment benefit on pay and grade pay + 125% DA totalling to 257(2.57 factor).

The author is perfectly justify in his observation. It was not necessary for the VII CPC to shock the government servants stating that they have given 15% increase by taking D.A. into consideration which they should not have taken while projecting the increase, since VI CPC had taken 40% on basic only and shown it separately as Grade Pay.

The following comparison give correct picture:

1. VI CPC: 40% increase on maximum of V CPC basic pay scale without D.A. and 21.5% increase including D.A(40/1.86 factor = 21.5%)

2. VII CPC: 32% increase of basic pay comprising Pay and Grade Pay without D.A and 14.22% increase including D.A(32/2.25 =14.22%)
Although there is a slight shortage in the fitment benfit granted by VII CPC compared to VI CPC, but the overall benefits under VII CPC is much more than VI CPC when compared to allowances as can be seen here below:

1. D.A amount will be more by 2.57 times from the existing level since the revised salary is increased by 2.57 times (125% D.A and 32% fitment benefit) which may give huge increase every 6 months compared to D.A. increase in 6th CPC Pay+ Grade Pay. For example a person whose basic pay(Pay + Grade Pay) is 29610 he will be getting only Rs.1777 as D.A. at 6%. But in his revised pay of Rs.77700 as per pay matrix at 2.57 factor (29610 x 2.57 =76098( next nearest amount in the pay matrix Rs.77700) his D.A. will be Rs.4662 at 6%.

2. HRA amount is increased by more than 100% of the existing HRA amount as illustrated by the author. For example an employee with a basic pay of Rs.29610 gets only Rs.8883 @ 30% under VI CPC. But under VII CPC he will be getting Rs.18648 @ 24% for the equivalent pay of Rs.77700 under VII CPC leading to an excess of Rs.9765 from the present HRA.

3. Transport .Allowance although retained at the existing level of 2.25 factor but D.A. on T.A gets increased by 2.25 times from the existing level. For example 6% D.A. on Rs.3200 comes to only Rs.192 whereas 6% D.A. on the revised transport allowance of Rs.7200 comes to Rs.432

Therefore the author’s conclusion that 7th CPC recommendations are far beneficial is beyond doubt.

bharath via 7thpaycommissionnews.in

7th Pay commission report on determination of minimum pay

7th Pay commission report on determination of minimum pay

7th CPC has fixed the Minimum Pay at Rs.18000/- as per Indian Labor Conference recommendations considering 3 units of a family of 2 + 2. The amount was arrived by the prices sourced from Labor Bureau, Shimla. 7th CPC claims that this amount is more than twice than that of a private sector employee.

Minimum Wage Fixed by 7th Pay Commission at Rs.18000/- and along with allowance proposed, total salary in the lowest cadre would be around Rs,22500

7th Pay Commission has fixed the minimum wages for the lowest cadre employee is Rs.18000 w.e.f 01.01.2016.

Determination of Minimum Pay

The first step in Wage Revision is to fix the  minimum wage that is required to be paid to the lowest ranked Staff to meet the expenditure for himself and his family in a dignified manner.

Minimum Pay Estimated by the V and VI CPC

V CPC adopted the ‘Constant Relative Income Approach’ which means the real minimum pay should grow in line with the cost of living 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 and finally increased to Rs.2550 at the implementation stage.

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 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. The 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.

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.

As per Supreme Court Directives the VI CPC considered additional components of expenditure towards Children’s education, medical treatment, recreation, festivals and ceremonies which this amount at 25 percent of the total minimum wage calculated from the first five components.  Since Government is providing medical facilities to all its employees the VI CPC arrived at a minimum wage of Rs.5,479. This was enhanced by about 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

In  its  representation  the JCM-Staff Side has  submitted that the Commission must determine a ‘need-based minimum pay’.  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 insisted on seven components (five ILS components + additional 25 percent provisioning + skill factor).

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.

Approach of the Commission

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.

The 7th Pay Commission has estimated the minimum pay (the calculations for which have been tabulated below) 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 of an item is the average of its prices prevailing in each month from 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.

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%).

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

The real pay in government is protected by providing Dearness Allowance (DA), which is  that  percentage  of  pay  by  which  the  CPI  (IW)   increases  over  a  fixed  base  value.

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 by the 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 pay in government was Rs.14,910 whereas minimum wage for a skilled worker was in the range of Rs.9,000–Rs.11,000 per month.

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.
On comparison with the private sector emoluments of a Govt 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.

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
		Per day PCU	Unit	Per month 3 PCU	Unit	Price/ 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) divided 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

Source: gconnect.in