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BY:

AMIT RANACHANDANI RAJPAL SINGHISHA MAKHIJASHRUTI SAROHAASHMIN ARORA

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PAY COMMISSION

y The Pay Commission is an administrative system /mechanism that the government of India set up in 1956 todetermine the salaries of government employees.

y Pay Commission comprises of a panel of members of theUnion Cabinet of India who decide on and are responsiblefor increasing the salaries of government employees.

y The sixth pay commission was set up in July 2006 underthe chairmanship of Justice B.N.Srikrishna. Therecommendation of the commission cost the governmentabout Rs. 20,000 crore.

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SIXTH PAY COMMISSION

y Members of the Sixth Pay Commission

Chairman : Mr. Justice B.N.SrikrishnaMembers : Prof.Ravindra Dholakia,

Mr. J.S.MathurMember-Secretary : Smt. Sushama Nath

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SIXTH PAY COMMISSION

y The pay commission suggested that arrears be paid toall government employees from January 2006 toSeptember 2008. 40% of these arrears were paid bythe government in 2008 and the remaining 60% werepaid in 2009. The primary goal of the Sixth PayCommission was to iron out complications in respect tovarious pay scales. In fact it recommended theremoval of pay scales and introduction of pay bands.

y The government employees had threatened to go on astrike if their salaries were not raised. The govtemployee want a hike in their salaries mainly becausethe Indian economy is facing a serious problem calledinflation.

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SIXTH CENTRAL PAY COMMISSION TO REVISE SALARIES

y T he central government approved the setting up of the sixth pay commission to upwardly revise salaries and perks for its 550,000 employees across the

country.

y A cabinet meeting headed by Prime MinisterManmohan Singh decided that the term of thecommission would be for 18 months.

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y Total number of grades reduced to 20 against the prevailing 35.

y Substantial increase in allowances like education and HRA; a new

medical insurance scheme recommended.

y Performance linked incentive scheme to be introduced.

y 5 day work week to continue; offices to be closed only on 3 national

holidays; all other gazetted holidays to be abolished and adjusted in

restricted holidays.

y

Cabinet secretary and secretaries to be kept in distinct pay scales atRs 90,000 and Rs 80,000 a month, respectively.

y Defence forces to be treated at par with civilians for running pay

bands and grades; in addition Rs 6,000 per month for officers up till

HIGHLIGHTS

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DEARNE SS A LLC E

F ROM INCREASE IN BASIC PAY

01 JAN 2006 Nil

01 JUL 2006 2%

01 JAN 2007 6%

01 JUL 2007 9%

01 JAN 2008 12%

01 JUL 2008 16%

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y The positive effect it would have are : More money in the handsof the people would result in more spending in malls and retailoutlets, thereby giving a push to slagging demand in consumerdurables and two wheelers.

y Quality of employees in the public sector and administrationwould hopefully improve, because of higher pay packets.

y Public sector units would be able to give better incentivs theiremployees and could hope to retain outperformers

y The armed forces, which are facing a shortage of middle levelpersonnel would be better placed to hire capable junior officersand other staff.

Positive Effects

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y The negative effects it would have on the economy are : Analready stretched Fiscal Deficit could worsen further, giving rise

to downgrades by international rating agencies.y However the Government could try to manage the situation by

means like increased revenue from spectrum sale to telecomcompanies and by disinvestment of shares in PSU's to the public.

y

Inflation fires could be further stoked by more disposableincome in the hands of the people. This should be moreworrisome to a Government already battling high inflation andcould lead to further tightening of liquidity by RBI.

N egative Effects

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Integrated pay structure replacing the erstwhile horizontal paystructure; removing stagnation.Annual increment @ 3% of basic pay on 1 st Jul each year.All ranks, except those in Apex scale, entitled to promotion

increment @ 3% of Basic Pay on each promotion.Existing three pay groups of PBOR reduced to two. Z merged with

Y group.Common pay scales for PBOR introduced wef 01 Jan 2006 enabling

Army PBOR to draw pay at par with Naval and Air F orce PBOR.Most allces doubled.

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Eligibility condition for grant of Tpt Allce, CEA, Travel

entitlement etc is liberalized.PBOR given the option to claim HRA.Leave encashment delinked from No of years of services and

encashment of leave while in service libralised.

Ceiling on DCRG raised to 10 Lakhs.Pension to be calculated at 50% of emoluments last drawn.

Minimum pension Rs 3500/-CCA abolished.

Addl Pension/F

amily Pension above 80 years of age.Commutation of pension at 50% instead of 43%/45% for

Offrs/PBOR respectively.

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y ONLY TWO TRADE GPs i.e. X & Y.

y

Y & Z GPs BEING MERGED

y PAY BANDS AND GRADE PAY FOR SAME RANKS INBOTH GPs.

y SEPARATE X GP PAY OF Rs.1400

X AND Y GPS RE TA INED

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Ranks Pre- revised pay Revised pay

Scale inclu Rank pay Pay band Grade pay MSP

Lt 8250-300-10050 15600-39100 5400 6000

Capt 10000-300-11800 15600-39100 6100 6000

Maj 12800-325-16050 15600-39100 6600 6000

Lt Col 15100-400-18 00 15600-39100 600 6000

3 400-6 000 8000 6000

Col 1 100-450-19350 3 400-6 000 8000 6000

Brig 19100-450-20450 3 400-6 000 8900 6000

Maj Gen 18400-500-22400 3 400-6 000 10000 0

Lt Gen 22400-525-24500 6 000- 90005500-80000

- 0

VCOAS/ Army Cdr 26000 (fixed) 80000 (fixed) - 0

COAS 30000 (fixed) 90000 (fixed) - 0

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NEW SC A L E S OF P A Y for other ranks

Rk Pay Band GradePay

MSP X Gp Pay

Sep 4860-20200 2000 2000 1400

Nk 4860-20200 2400 2000 1400

Hav 4860-20200 2800 2000 1400

Nb/Sub 8 00-34800 4200 2000 1400

Sub 8 00-34800 4600 2000 1400

Sub Maj 8 00-34800 4800 2000 1400

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y X CITIES - 30%

y Y CITIES - 20% (INCL VIZAG)

y Z CITIES - 10%

For HRA, BP+ Gde Pay+ MSP shall be taken into acct.

H RA

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CEAmaximum to Rs 1000/- for upto 2 children

TA increased 4 timesOffc: Rs 3200 + DAJCO: Rs 1600 + DA

Rs 800 + DA

DA- 40%

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CIEF ield Area Allc

High Altitude AllcF lying AllcSeparate family Allc

Siachen AllcF amily Planning Allc

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ARRE

ARS P

AYMENT FOR INDI

AN R

AILW

AY E M PLO Y EES

y According to the arrear payment plan,Railways would make 40 percent of arrear payment in the current financial

year.Rest 60% would be made in the next fiscal.y It is expected that each railway employee will take home an

average of 21% higher salary from the next month.y The salary increase for Group A officers will be much more

than 21 per cent and in cases of some senior Railway Board officials, the hike is almost 50 per cent

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LIST OF TH E F INAL N EW P AY B ANDS

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PAY BAND AND GRADE PAY y

* The basic pay drawn as on 1.1.2006 on the existing Fifth CPC pay scales will be multiplied by a factor of 1.86

and then rounded off to next multiple of 10. This will be the pay in the revised running Pay Band. Grade Pay, as approved by the Government, corresponding to the pre- revised pay scale, will then be added to the Pay in the revised Pay Band. The total of pay in the Pay Band and grade pay will be the revised Basic Pay as on 1.1.2006.*Rate of annual increments will be 3% and the rate of variable increment for high achievers in PB-3 will be 4%.

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DA A ND OTHER ALL OWA NCESy

Campus restriction for grant of Transport Allowance will be removed.Consequently, employees living in campuses will also be eligible for Transport Allowance. Further, Transport Allowance for the employees at the lowest levels will be increased to Rs.600 (from Rs.400) in A-1/A class cities and Rs.400 (from Rs.300) in other towns.

* New TA - Employees drawing grade pay of Rs. 5400 and above will be eligible to receive TA of Rs.3200 and DA thereon (A1/A class cites) and Rs.1600 and DA thereon (other places. Similarly Employees drawing grade pay of Rs.4200 to Rs.4800 will be eligible to receive TA of Rs. Rs.1600 and DA thereon (A1/A class cites) and Rs.800 and DA thereon (other places).

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CONT D .y Employees drawing grade pay of below Rs. 4200 will be eligible to receive TA

of Rs. 600 and DA thereon (A1/A class cites) and Rs.400 and DA thereon (other places).

* City Compensatory Allowance abolished.

y Cycle Allowance, Washing Allowance, Cash Handling Allowance, Special Allowance, Night Duty Allowance and Split Duty Allowance have been doubled. Similarly, rates of allowances specific to different Ministries/Departments/Organisations not covered in this Report will also be doubled. The rates of these allowances will be increased by 25% every time the Dearness Allowance payable on revised pay scales goes up by 50%.

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ASSUR ED C AR EE R P R OG R ESSI ONy Three upgradations will be granted under Assured Career

Progression (ACP) Scheme at 10, 20 and 30 years as per the modified ACP Scheme recommended by the Commission. ACP Scheme will also be applicable to Group A employees.

* Financial upgradation through ACP will be available whenever a person has spent 10 years continuously in the same grade.

* Benefit of pay fixation available at the time of normal promotion shall be allowed at the time of financial

upgradations under the scheme. Thus, an increase of 3% of pay and grade pay shall be available as financial upgradation under the scheme