Sixth Pay Commission News / Updates

Pay issue to be resolved shortly : Mr. Pranab Mukherjee

2008-10-15T05:48:00.000-07:00

A ministerial committee, set up to look into the armed forces' grievance about pay “anomalies”, is likely to sort out the matter soon.

External affairs minister Mr Pranab Mukherjee, who heads the three-member committee, today said he had discussed the matter with Prime Minister Dr Manmohan Singh and defence minister Mr AK Antony.
“Shortly, I am going to discuss with the finance minister (P Chidambaram),” he told reporters here when asked about the issue.

Without giving details of his discussions with the Prime Minister, Mr Mukherjee merely said: “I do hope we will be able to sort out the issue shortly”.

The committee, which also includes Mr Antony and Mr Chidambaram, was set up by the Prime Minister on 25 September in the wake of deep resentment in the armed forces, who complained that there were “anomalies” in the 6th Pay Commission recommendations and that it had lowered the status of their officers.
After the government notification was issued on 29 August, the issues of “anomalies” in the pay for officers was first raised by Air chief Fali Homi Major in his letter in his capacity as acting chairman of Chiefs of Staff Committee (COSC).

Chiefs of Navy and Army too have been voicing their resentment. Mr Antony has strongly favoured resolution of core issues raised by the three services chiefs in their representation to the government. He wrote to Mr Chidambaram, raising issues of disparities”, including the ones relating to Personnel Below Officer Rank (PBORs).

Pay issue of armed forces to be resolved soon: Pranab

2008-10-15T05:47:00.001-07:00

A ministerial committee, set up to look into the armed forces' grievance about pay "anomalies", is likely to sort out the matter soon.

External Affairs Minister Pranab Mukherjee, who heads the three-member committee, on Monday said he had discussed the matter with Prime Minister Manmohan Singh and Defence Minister A K Antony.

"Shortly, I am going to discuss with the Finance Minister (P Chidambaram)," he told reporters here when asked about the issue.

Without giving details of his discussions with the Prime Minister, Mukherjee merely said "I do hope we will be able to sort out the issue shortly".

The committee, which also includes Antony and Chidambaram, was set up by the Prime Minister on September 25 in the wake of deep resentment in the armed forces, who complained that there were "anomalies" in the 6th Pay Commission recommendations and that it had lowered the status of their officers.

After the government notification was issued on August 29, the issues of "anomalies" in the pay for officers was first raised by Air chief Fali Homi Major in his letter in his capacity as acting Chairman of Chiefs of Staff Committee (COSC).

Chiefs of Navy and Army too have been voicing their resentment.

Antony has strongly favoured resolution of core issues raised by the three services chiefs in their representation to the government.

He wrote to Chidambaram, raising issues of disparities", including the ones relating to Personnel Below Officer Rank (PBORs).

Professors, lecturers get hefty pay hike after 6th Pay Commission

2008-09-16T03:40:00.000-07:00

Professors and lecturers are all set to get hefty pay hike. Following the 6th Pay Commission implementation there was some disappointment among university and colleges teachers over the delay in implementation of the pay panel recommendation, but finally they too are set for substantial salary hikes.

If everything goes well university teachers will get approximately 30 percent pay hikes on the lines of the Sixth Pay Panel recommendations.

University grants commission had set up a committee under a former vice chancellor of prestigious JNU to recommend the pay revision needed in teaching fraternity in the universities.

The GK Chadha committee was under fire recently for not being able to submit its report on time, the same day when Sixth Pay Commission presented its report.

But Chadha committee has some good news for teachers besides pay raise. It has reportedly favoured raising of retirement age to 65, flexibility to accommodate talent through incentives, grant for working in remote and inaccessible areas and also emphasis on research.

Chadha while making the announcement said, “We will ask all states to invoke a uniform policy on the age of retirement and re-employment of teachers. The uniformity is essential to rid India’s higher education sector of inter-regional disparities”.

Chadha went on to add, “We will focus at the entry level, on those just completing their academics and contemplating a life of teaching. We want to lure them into the profession.”

He added, “We cannot offer the red-carpet treatment that the corporate sector can, but we plan to offer them better research facilities to keep them (faculty) in our universities.”

LATEST UPDATED NOTIFICATIONS BY M/o FINANCE

2008-09-04T23:59:00.000-07:00

Latest Notification by Govt. on 6th Pay commission

Highlights of Sixth Pay Commission

NOTIFICATION BY MINISTRY OF FINANCE dt2982008

OM dt 3082008 reg Fixation of Pay and Arrears

Recommendations Accepted and Rejected by Pay Commission

Gazette Notification on 6th Pay Commission in Hindi

Calculate your Pay and Arrears

2008-09-04T23:23:00.000-07:00

Download the Calculators for calculating Pay and Arrears based on 6th Pay commission from here

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Dearness Allowance - Revised Rates.

2008-09-03T22:33:00.001-07:00

Recommendation of Sixth Central Pay Commission - Decision of Government relating to the grant of Dearness Allowance to the Central Government Servants - Revised Rates.

New rates of DA has been announced on http://india.gov.in/govt/paycommission.php (http://164.100.50.223/six_pay_comm/allowances.pdf)

From 1-1-2006 : No Dearness Allowance
From 1-7-2006 : 2% of Basic Pay and NPA, where applicable
From 1-1-2007 : 6% of Basic Pay and NPA, where applicable
From 1-7-2007 : 9% of Basic Pay and NPA, where applicable
From 1-1-2008 : 12% of Basic Pay and NPA, where applicable
From 1-7-2008 : 16% of Basic Pay and NPA, where applicable

All the allowances and pension related queries are answered.1.But what about LTC? No circular has been issued by MoF so far on revised frequency and revised entitlement of LTC for CG employees. Any idea about this? 2. What about Family Planning Allowance? No orders on this by MoF so far. I think MoF have forgotten about the above two issues. Who will remind them? All CG employees are eagerly awaiting for the revised orders in respect of the above. Hope MoF sees this site and atleast after this, they issue the above two orders in a day or two without delaying any further so that all CG employees get to know the revised rules clearly without any scope for confusion.

Government clarifies, income-tax only on 40 per cent pay arrears this year

2008-09-03T22:32:00.002-07:00

Government today said it would tax only 40 per cent of salary arrears to be paid to central government employees in the current fiscal on implementation of Sixth Pay Commission recommendations.
Generally speaking income earned in a year is taxed in that particular year, official sources said.

A section of the media today reported that the entire amount of arrears would attract tax this fiscal.

As per the notification issued by the government last month, central government employees will get 40 per cent of arrears during the current financial year and the remaining amount in the next financial year.

Government instructions issued on August 30, 2008, regarding fixation of pay and payment arrears consequent to implementation of the Sixth Central Pay Commission recommendations clearly states that in authorising the arrears income tax as due may also be deducted and credited to the government.

The arrears with effect from January 2006 would cost Rs 29,373 crore. Of the arrears, 40 per cent would be paid during the current year to the 50 lakh employees of the central government.

The revised pay scales will add Rs 4,500-5,500 crore to the government exchequer this fiscal in the form of personal income tax.

Besides, some money would also come through indirect taxes as some of the increased pay would go into buying products and services, official sources said here.

Incentive-based pay set to debut with science & tech department

2008-09-03T22:32:00.001-07:00

The Union government will soon offer an incentive-based salary package for employees of some departments and allow recruitment from the private sector on contract, in line with the recommendations of the Sixth Pay Commission aimed at reforming the bureaucracy.

The department of science and technology, or DST, has already moved to put in place an incentive-based system, said a senior finance ministry official, who didn’t wish to be identified. “Once DST implements it, we expect there will be pressure on other government departments to follow suit,” this official added.
The government on 14 August accepted the Pay Commission’s recommendations, offering 5 million employees an average raise of about 21%.

According to the same finance ministry official, the cabinet has laid down that any government department was free to put in place a performance-related incentive system provided that it is “budget-neutral”, meaning the expense will have to be offset through savings in other expenditure.

The Sixth Pay Commission carried out a study through the Indian Institute of Management, Ahmedabad, on a performance-based incentive system. The study was aimed at working out a model whereby a base salary is attached to each post based on skills and responsibility; simultaneously, a second component would be payable over and above the salary on the basis of the productivity and performance of employees, either individually or as a group.

The study recommended an annual bonus of up to 20% to employees whose achievements exceed certain targets; this has been accepted by the cabinet. The government has also given in-principle approval to contractual postings in government departments of employees hired from private sector. Their pay scales and other emoluments will be decided later.
According to the official, the impact had been partially mitigated since the allowances, which are a key part of the emoluments structure, are to come into effect only from 1 September. The full impact would be realised only in the next fiscal; the official declined to share the estimates and Mint could not independently confirm the same.

For women government employees, there are some sweetners. Women employees will now receive 180 days of maternity leave as against 135 days previously. This can now be extended to two years, made up of accumulated leave; earlier this had been capped at one year.

“Another two-year childcare leave has also been granted which can be taken in parts till children reach the age limit of 18 years,” the official said. According to the official, this was the first time such a facility was being extended in government and had been modelled on what has already been adopted in Japan.

The government is also working out details to pay special allowances to paramilitary forces in line with the Rs6,000 per month allowance given to military personnel. Asked whether allowances for the paramilitary forces will be at par with the armed forces, the official said, “We would like to give an edge to the defence forces.”
The official also denied news reports that government has decided to tax 100% arrears that will be paid to government staff. The official said that as government employees will receive only 40% of arrears during the current financial year, they have to pay tax on only this amount.

Govt puts payout of arrears on fast track

2008-09-03T22:29:00.000-07:00

To expedite the payment of salary arrears to lakhs of its employees after implementation of the Sixth Pay Commission's report, the government has waived any “pre-check” of the claims they would be submitting.

This has been done to ensure that arrears are cleared at the earliest when the salary for September is paid to employees on the last working day of the month.

The employees would, however, be required to furnish an undertaking so that the government can later deduct any excess payment made to them due to any miscalculation.

Usually, the drawing and disbursement officer in a government office is supposed to verify the salary and arrear bills of every employee but the one-time exception will save the accounts section the additional burden. It will, however, work out the details of
the dues later.

After the new salaries were notified on August 29, the government came out with a detailed “ready reckoner” that took into account each earlier pay scale and the corresponding change in it.

“The calculation of new salary has become easy but some error may occur while calculating the arrears because increments are involved. It is good that the pre-check requirement has been dispensed with,” an officer said.

Although the employees will have to pay income tax on the arrears, most of them are now busy calculating their dues. Only 40% of the arrears are to be paid during the current fiscal and the remaining 60% will be disbursed in 2009-10. The employees have the option to deposit the arrears in their GPF accounts after deduction of tax. For the payment of the hiked salaries, the employees have been asked to submit a statement of fixation of pay after tallying it with the ready reckoner.

The buzz in government offices is also on a possible “anomaly” in the new scales. The pay band system, officers said, is likely to dilute the motivation for promotion because an employee's salary will, anyway, go on increasing annually.

Under the new rules, there are only four pay bands for all employees and officers with assured annual increments. As a result, a large number of employees, despite their in-cadre seniority, would be placed in the same pay band for a considerable period.

“The financial premium on promotions will certainly get diluted. We need to see what impact the new system has on the motivation levels of employees,” a director dealing with accounts said.

The increase in salaries - How the government gives less to its staff

2008-08-31T22:17:00.001-07:00

THE Central Government announced a revised pay structure for its employees on the eve of Independence Day. It has been called a “jackpot” for the roughly five million employees of the government. It has also opened the way for an increase in the salaries of the employees of the state governments and university and college teachers. So, in due course, roughly 17 million public sector employees will have their emoluments raised.

When the Sixth Pay Commission recommendations were announced, no one was happy. The armed forces, police officers, bureaucrats, et al, protested against the meager proposed increase in the salaries which was below their expectations, given the prevailing situation in the economy and their requirements. For instance, the armed forces have been pointing to the difficulties in retaining and recruiting the requisite number of officers and specialists like doctors and engineers at the prevailing salaries.

The government has announced an increase over the Pay Commission recommendations. But if the total increase is of the order of 21 per cent on an average (as some reports suggest), then this would hardly mollify the disgruntled groups. They were not seeking about a 10 per cent or 20 per cent hike but demanding a 200 or 300 per cent increase in their emoluments. The government seems to be in a no-win situation.

Those who have characterised the announcement as a “jackpot” or a “bonanza” obviously feel that the government servants do not even deserve what was announced by the pay commission so that the additional amount is even more unfair. This is in contrast to the applause from the same circles when the corporate sector announces annual (not over 10 years) salary increases of 40 or 50 per cent and huge bonuses for its managers. What is involved in the announcement of a pay commission award?

Pay commissions have been set up at 10-year intervals because the salaries of the government servants lag behind the ongoing inflation. The government servants get an annual increment and every six months a dearness allowance (DA) to compensate for the price rise. However, since the compensation is never commensurate with the price rise, real incomes keep falling and the pay commissions are supposed to correct for this decline.

Thus, in-between the setting up of the pay commissions, the government gets a benefit by paying its employees less than what it should have been paying. Further, the pay commissions typically compensate the employees for inflation only at the bottom of their pay scales so that the emoluments of those at senior levels come down to roughly the starting point of their scales and they lose the benefit of the increments earned due to seniority. This is a permanent advantage to the government.

Further, over a period of time, the official rate of inflation has gone out of line with the real inflation. The services sector is now over 60 per cent of GDP but its weight in the consumer price index is only 16 per cent. Thus, rapid increases in school fees, travel, entertainment, etc, are not factored in. As such, the compensation for inflation is only partial. Consequently, the government servants feel that they are not able to maintain their standard of living. But there is something else even more critical.

Salaries in the private organised sector and the emoluments of professionals and businessmen have seen a huge increase. These have become benchmarks for everyone to aspire for. Economic theory tells us that when income differentials widen, there is social discontent. Up to 1991, corporate salaries were capped at Rs 3,12,000 per annum. This cap was lifted and now salaries in the private sector can go into crores with top salaries up to Rs 25 crore. In other words, there has been an increase of around 800 times at the top. The starting managerial salaries are even higher than the salary of top government officials at retirement.

Such huge salary differentials have led to discontent all around. Senior bureaucrats, doctors, pilots, engineers, etc, aspire for leave for the private sector where they can draw 10 times (or more) their current salaries.

It is argued that the government’s budget would be upset by the announcement of the salary increases. Hence these should be moderated. But it is forgotten that the government has all along been getting the benefit of not paying its employees what it should have been paying.

However, the real issue is not the financial burden but corruption, weak governance and poor delivery of public services. The public faces harassment in the courts, public sector hospitals, government offices, etc. Given the low prestige of government employees, the public resents any additional payment to them since they do not even justify the present payment they receive.

While in a limited framework, these are the relevant questions, at a higher plane, one may ask: how legitimate is it for anyone to earn salaries 3.5 times to 35 times the per capita incomes when in 2004-05, 77 per cent of Indians spent Rs 20 or less per capita per day? In other words, less than Rs 3,000 per month for a family of five? It is true that people usually look at those above them and not those below them, but why should the government not take a broader perspective? Why, in terms of reference, is there no point about the relationship of salaries in the country with the per capita incomes which represents the nation’s true paying capacity? If some get a disproportionately high income, it is at the expense of the others.

Not only should we ask how much a poor nation can afford but also who should get what. Does a school teacher or a researcher not deserve more than what we pay someone to sell cigarettes or toiletries or for moving funds around the globe? Should salaries depend on how much power one has in the market or how much the managers are willing to do the bidding of the businessmen or how much political clout one can exercise or on the long run, the value of one’s work to society?

In an economy where black economy is rampant (50 per cent of GDP) and businesses earn large sums of money in illegitimate ways and share a part of that with politicians, consumerism has become rampant. Not only does one see it in five-star hotels or at flashy weddings but also in parliament. The people’s representatives are flaunting their wealth for all to see. The Prime Minister and the President drive around in flashy cars and live a lifestyle worthy of kings of olden days. This has led to a severe demonstration effect with everyone aspiring for consuming more so that none is happy with less or willing to sacrifice for the sake of a common good. The Prime Minister did talk of ostentation in the corporate sector, but he was laughed out of court and fingers were pointed at the politicians, so he never raised the matter again. That is the clout of the elite.

In brief, since the debate on the emoluments of government servants has remained in the narrow confines of the budget or its inflationary consequences, it has missed the main point that it should relate to the country’s worldview (or a lack of it) about equity and social justice. In the 61st year of our Independence, the ongoing debate shows that for the elite, whether in the public or private sectors, the nation is hardly the reference point for action.