Monday, March 24, 2008

Highlights of the 6th Pay Commission Panel report

The following are the highlights of the 6th Pay Commission Panel report that was submitted to the government on Monday: The 18-month tenure of the Commission was till April 4, 2008.

Implementation of the revised pay scales from January 1, 2006. Recommendations relating to allowances to be implemented prospectively.

To remove stagnation, introduction of running pay bands for all posts in the Government presently existing in scales below that of Rs 26,000 (fixed).

Four distinct running pay bands being recommended � one running band each for all categories of employees in groups 'B' and 'C' with 2 running pay bands for Group A posts.

The posts of Secretary to Government of India/equivalent and Cabinet Secretary/equivalent to be kept in distinct pay scales.

A separate running pay band, designated as -1S scale, is not to be counted for any purpose as no future recruitment is to be made in this grade and all the present Group D employees not possessing the prescribed qualifications are to be upgraded and placed in the Group 'C' running pay band PB-1 after they are suitably retrained. Group D employees possessing the minimum prescribed qualifications to be placed in PB-1 pay band straightaway.

Minimum salary at the entry level of PB-1 pay band to be Rs 6660 (Rs 4860 as pay in the pay band plus Rs 1800 as grade pay). Maximum salary at the level of Secretary/equivalent to be Rs 80000. The minimum: maximum ratio 1:12.

Every post, barring that of Secretary/equivalent and Cabinet Secretary/equivalent to have a distinct grade pay attached to it. Grade pay (being a fixed amount attached to each post in the hierarchy) to determine the status of a post with a senior post being given higher grade pay.

The total number of grades reduced to 20 spread across four distinct running pay bands; one Apex Scale and another grade for the post of Cabinet Secretary/equivalent as against 35 standard pay scales existing earlier.

At the time of promotion from one post to another, the grade pay attached to posts in different levels within the same running pay band to change. Additionally, increase in form of one increment to be given at the time of promotion. A person stagnating at the maximum of any pay band for more than one year continuously to be placed in the immediate next higher pay band without any change in the grade pay.

Annual increments to be paid in form of two and half percent of the total of pay in the Pay Band and the corresponding grade pay. The date of annual increments, in all cases, to be first of July. Employees completing six months and above in the scale as on July 1 to be eligible.

Another form of variable increments for Group A Pay Band PB-3, where annual increments in the band will vary depending upon the performance. Eighty percent or more employees in the grade to be allowed normal increment at the rate of 2.5% with the high performers (not exceeding 20 per cent) during the year being allowed increment at the higher rate of 3.5%. Government advised to extend the scheme of variable increments in running paybands PB1 and PB2.

The following scheme of revised pay bands is being recommended:

(In Rs)


Pay Scale
Pay Scale
Pay Band
Corresponding Pay Bands
Grade Pay

















*Employees in these scales to be eventually placed in pay band PB-1


Pay Scale
Pay Scale
Pay Band
Corresponding Pay Bands
Grade Pay

New Scale

(Group A Entry)


















26000 (fixed)
Apex Scale
80000 (fixed)

3000 (fixed)
90000 (fixed)

Defence Forces given running pay bands and grade pay on par with those recommended for civilians.

In addition, Military service Pay for all personnel of Defence Forces till the rank of Brigadier/equivalent @Rs 6000 pm for officers, Rs 4200 pm for Military Nursing Services officers and Rs 1000 pm for Personnel below Officers ranks. The Military Service Pay to count for all purposes excluding increments.

Director general (Armed Force Medical services) placed in the Apex grade of Rs 80,000 (fixed)

In Defence Forces, only two trade groups to be retained for Personnel Below Officer Ranks with the earlier trade groups Y and Z being merged. The personnel in trade group X to have an additional X Group Pay of Rs 1400 per month.

Certain posts in senior Administrative Grade (SAG) and Higher Administrative Grade (HAG) requiring technical or specialized expertise and not encadred in any of the services to be opened up for being filled bys it able officers within the Government as well as by outsiders on contact. Shift from carrier based to post based selection in the higher echelons of Government in order to get the best domain based expertise.

Creation of additional posts in senior administrative grade/equivalent/higher grades in future to be strictly on functional considerations with such posts invariably being created outside the cadre to be filled by method of open selection including contractual appointment from within or outside the government.

Introduction of Performance Related Incentive Scheme (PRIS) in the government under which employees to be eligible for pecuniary remuneration over and above the pay. PRIS to replace ad hoc bonus scheme immediately and eventually replace Productivity Linked Bonus. PRIS to be budget neutral.

System put in place for giving market driven compensation package to young scientists and posts requiring special expertise and professional skills.
Parity established between field and secretariat offices.

The secretariat and stenographers cadres to stand merged in future. All future recruitment in secretariat to be made as executive assistants with minimum qualifications of gradation and one-year diploma in computers. Executive assistants to discharge the functions presently being carried out by assistants as well as the private secretaries.

Scale of Rs 26,000 (fixed) corresponding to the revised pay scale of Rs 80,000 (fixed).

Base year of the Consumer Price Index (CPI) for computation of dearness allowance to be revised as frequently as feasible. Formulation of a separate CPI for government employees by National Statistical Commission for computation of dearness allowance suggested.

Existing rates of most of the allowances to be doubled both in case of Defence Forces as well as civilian employees.

Existing rate of HRA to be retained for A-1 cities. A, B-1, and B-2 cities to be given this allowance at the higher rate of 20%. C and Unclassified cities to be given the allowance at the higher rate of 10%.

CCA to be subsumed in Transport Allowance and the rates of this allowance to be increased by 4 times.

Travel entitlements to be paid on actuals.

Reimbursement of education allowance to be raised from existing Rs 50 to Rs 1,000 per child per month, subject to a maximum of two children. Hostel subsidy to be raised from existing Rs 300 per month to Rs 3,000 per month.

Risk allowance to be replaced by risk insurance.

All fixed allowances made inflation proof with provision of automatic revision whenever dearness allowance payable on revised pay bands goes up by 50%. Transport allowance to be increased every year on the basis of the increase in the dearness allowance.

Encashment of earned leave in case of defence forces personnel delinked from the number of years of service. All defence forces personnel to be eligible of leave encashment of up to 300 days at the time of retirement/discharge.

A new medical insurance scheme recommended for government employees. The scheme to be optional for existing central government employees and pensioners. New government employees and new pensioners to be compulsorily covered by the scheme.

Fitment formula recommended for serving employees to be extended in case of existing pensioners/family pensioners.

Rates of Constant Attendant Allowance for disabled pensioners to be increased by five times to Rs 3,000 per month.

Pension to be paid at 50% of the average emoluments/last pay drawn (whichever is more beneficial) without linking it to 33 years of qualifying service for grant of full pension.

A liberal severance package for employees leaving service between 15 to 20 years of service.

Higher rates of pension for retirees and family pensioners on attaining the age of 80, 85, 90, 95 and 100 years.

Revision of the commutation table suggested for commutation of pension.
In case of government employees dying in harness, family pension to be paid at enhanced rates for a period of 10 years.

Framing of an appropriate insurance scheme suggested for meeting the OPD needs of pensioners in non-CGHS areas.

A new mechanism for grant of advances under which an employee will take the advance from an approved bank and the government will give an interest subsidy equal to two percentage points on the rate of interest being charged by the bank to the employee. Existing limits of various advances increased and provisions made for their automatic revision periodically.

Continuation of five-day week. Government offices to remain closed only on the three national holidays. All other gazetted holidays to be abolished and compensated by increasing the number of restricted holidays from two to eight days in a year.

Benefits like staggered working hours, special leave for child care, enhanced maternity leave of 180 days, better accommodation facilities in the form of working women's hostels, etc specifically for women employees.

Government employees with disabilities recommended various benefits like enhanced number of casual leave, special aids and appliances for facilitating office work, higher interest subsidy for automobile loans, liberal flexi hours, higher rate of transport allowance, better prosthetic aids and proper grievance redressal machinery. Extra allowance for disabled women employees to take care of young child till the time the child attains the age of two years.

Lateral movement of all Defence Forces personnel (both personnel below officer ranks and short service commission officers) at appropriate levels in Central Police Organisations/central Para military Forces as well as to the various posts of defence civilians in the ministry of defence.

Steps leading to improvement in the existing delivery mechanisms by more delegation, delaying and an emphasis on achieving quantifiable and concrete end results. Emphasis to be on outcomes rather than processes.

Greater emphasis on field offices/organizations at the cutting edge of delivery
Enhanced pay scales for nurses, teachers, constabulary and postmen with whom the common citizen has most frequent interaction. Forest guards also to get higher pay scale.

Better deal for training academies.
Normal replacement pay band, grade pay and allowances for the existing members of regulatory bodies. A revised method of selection with a higher pay package to those recruited through the revised process of selection in selected organizations.
All the recommendations to be treated as an organic whole as partial implementation will bring in several anomalies and inconsistencies.

The recommendations contained in the report to cost Rs 12,561 crore in the year 2008-09. Savings of Rs 4,586 crore likely to accrue on account of various measures suggested in the report. The net financial implications of the recommendations contained in the report estimated to be Rs 7,975 crore for the year 2008-09. an additional, one-time burden of Rs 18,060 crore on payment of arrears.

Sunday, March 23, 2008

Recommendations will be submitted in Cabinet

The committe submits its recommendations on the sixth pay commission in the cabinet on 24 March, it is going to hike upto 42% on the present pay.

Thursday, March 20, 2008

Holi gift? Pay Panel for 42% hike in salaries

Wed, Mar 19 12:07 PM
The festive season this weekend will bring extra cheer to 55 lakh Central government employees as the Sixth Pay Commission is likely to recommend an increase of up to 42% in their salaries and pensions when it submits its report on Thursday.
While the number of salary grades will be pruned to 18 from the existing 33, the basic salary proposed is 35 to 42% higher than what each employee currently gets, inclusive of dearness pay and dearness allowance.
The house rent allowance will become city-specific with those living in metros getting the full 30% of the basic salary. But for other towns, the HRA could be capped at 15% of the basic salary.
The commission is also expected to recommend the delinking of pay from post so that an employee would get higher scale at fixed time intervals. That is, he need not await his promotion to become eligible for the next salary grade.
This was one of the suggestions by the Department of Personnel & Training which had argued that while there would be stagnation in promotion, the employees should not be devoid of pay hikes.
There would be performance-related pay for scientists so that they could be put on a fast track to reverse brain drain. These fast performers would be shifted to contractual agreement with their salaries coming from the project money.
Although the government is free to accept or reject all or part of the commission's recommendations, considering that the UPA government has entered election mode, the revised pay packets could get approved.
Incidentally, as first reported in The Indian Express, the Finance Ministry has been working out numbers assuming an average 20% increase in salaries and pensions with past payments from January 2006 to the implementation date tucked away into GPF to bring down the instant payout.
This 20% translates into an increase in the wage and pension bill by Rs 11,500 crore.
Finance Minister P Chidambaram provided for Rs 26,657 crore or 0.5% of the fiscal deficit as the "headroom," but the margin reduced after a supplementary demand for Rs 10,000 crore for the loan waiver of farmers.

Will Salary Hike Improve Performance!

Wednesday, March 19, 2008 (New Delhi)
The sixth pay commission that is expected to submit its report any day, will bring windfall gains for more than 55 lakh government employees, but the big question is, will the pay hike reduce corruption in the government and improve governance?Neera Yadav and Akhand Pratap Singh, both former chief secretaries of Uttar Pradesh were identified as the most corrupt by their own fraternity in 1998, people who had close political links.A similar exercise undertaken recently by the India Rejuvenation Initiative, an NGO run by former judges and bureaucrats, found that the 10 most corrupt IAS and IPS officers in UP were worth over Rs 100 crore. Figures starkly disproportionate to their salaries.PAY HIKE ON THE CARDS
Salary hike for central government employees after Holi
Reports: Salaries to go up by at least 20 per cent
55 lakh central government employees to benefit
Sixth pay commission will cost 1.5 per cent of GDPBENEFICIARIES
Armed forces, paramilitary
Class four employeesWHAT PAY HIKE MEANS
Cabinet Secretary (Basic Salary): Rs 25-26,000
After 20 per cent hike (Basic Salary): Rs 30-31,000THE SALARY DIVIDE
DC's salary: Rs 20,000 + perks
Call centre employee: Rs 20,000
RBI Governor: Rs 44,000 + perks
Software analyst: Rs 60,000The sixth pay commission report is expected soon and the government employees are doing a quick calculation of what is could possibly mean to them.At least, a 20 per cent hike is expected, but will this raise mean less corrupt officers.''Anyone who thinks pay hikes by the commission will reduce corruption is living in a fool's paradise. Today bureaucrats want the economic muscle of a businessman and the power of a politician,'' said Prakash Singh, former DGP, Uttar Pradesh.The earlier pay commission recommended a 30 per cent hike in salaries and the government accepted it without delay.But suggestions like cutting down a bloated bureaucracy and making babus accountable have not yet been implemented.''What about accountability and delivery systems? We can easily cut down the babus and chaprasis by one fourth. The efficiency would increase tremendously,'' said TSR Subramaniam, former cabinet secretary.Government employees have huge expectations from the sixth pay commission and it's a crucial vote bank that the government will not want to annoy, given the fact that elections don't seem to be too far away.

Saturday, March 15, 2008

Sixth Pay Commission may hike govt salaries by 30%

By Shishir Sinha, and Varun Kumar, CNBC-TV18

Here's another indication that the UPA is in election mode. After that farm loan waiver and tax breaks for the middle-class, the government is all set to spend Rs 53,000 crore on salary hikes for central government employees.

The wait is almost over for the lakhs of employees who serve the government of India. Sources have informed CNBC-TV18 that the sixth Pay Commission is close to finalising its recommendations and a windfall is on the cards for employees.

Salaries are expected to increase by 25 to 33% across the board and the hike will take place with retrospective effect from January 1, 2006. However, there is no scope for any interim relief till the recommendations are implemented.

But the recommendations come at a time when the government is already burdened with a huge farm loan waiver and other schemes benefiting the social sector. But fears of pressure on the treasury are countered by the larger than expected tax collections and an improving fiscal deficit.

But some voices feel the government may need a few years to absorb the financial impact, as had happened during the fifth Pay Commission. While the Railways have made some provisions for the pay hike in their Budget, the government may seek grants in Parliament.

Based on 2007-08 figures, the government may have to shell out an extra Rs 13,000 crore for salaries while arrears may cost up to Rs 40,000 crore and may need to be paid in installments.

State governments are not obliged to match the pay scales set by the Centre. But with the state-centre wage gap widening, the states may have no option but try and match up to the Centre's bonanza.

CNBC-TV18 Disclaimer

This information is source-based and has not been provided to the stock-exchanges.

Sunday, March 9, 2008

Performance Related Pay

Examining the Feasibility of Performance Related Pay (PRP) in Government

Pay and allowances in the Government are linked to service-incremental salary scales and promotions under different service rules. Promotions have been used as a tool to provide incentive especially at senior management levels. Pay increases are based on annual increments and the salaries depend more on length of service and grades rather than the performance of an individual employee.

The aim of the study is to examine the feasibility of working out a model whereby a base salary is attached to each post based on the conventional criterion of skills and responsibility; simultaneously, a second component is introduced that is payable as a percentage of the salary on the basis of productivity and the performance of the employees, either individually or as a group.

Terms of reference: The study should examine the correct basis of pay increases and their relation, if any, to performance and productivity of the employees; and examine possibilities of evolving a direct correlation between PRP and delivery of services to citizens/organization/other departments, as the case may be.

The study should evolve measurable, quantifiable criteria for judging performance and productivity of different grades of employees in various government organizations* depending on the nature of their work and the relationship with their users/clients.

The study should, inter alia, examine international best practices in this regard.

The study should develop a model suited to Indian conditions which is transparent, measurable, fosters accountability and is linked to deliverables.

The study should devise means by which PRP can be introduced in the Government. Specifically it should consider the following:

Should PRP be applied to all jobs and all sectors, or higher managerial positions /percentage of jobs or sectors to begin with.

Should PRP be individual based or group based.

Should specific percentages be prescribed for restricting number of posts to which PRP is given.
The study would be conducted by Indian Institute of Management, Ahmedabad.

Team Leader Contact Details:
Prof. Biju Varkkey
Indian Institute of Management Vastrapur, Ahmedabad, 380015
Tel. 079-26324874

The conceptual frame work includes the following:

Identification of metrics for five measures of performance viz.
(i) Competency/ skill
(ii) Effort /activity
(iii) Result/ output/ value added measures
(iv) Efficiency/ productivity, and
(v) Quality/ customer satisfaction.

Suggesting Modified Pay structure having flexibility to implement PRP viz. Pay structure having fixed and variable components with variable component linked to performance measures.

Suggest enabling conditions for PRP.
The Ministries/ cluster of Ministries selected are:

Cluster I
Ministry of Health & Family Welfare (D/o Health & Family Welfare)
Ministry of Urban Development (D/o UD & A)

Cluster II
Ministry of Corporate Affairs
Ministry of Finance (D/o Revenue, Central Board of Direct Taxes and Central Board of Excise and Customs)

Cluster III

Ministry of Science & Technology (D/o Science & Technology)
Ministry of Communication & Information Technology (D/O Telecommunications-Posts)

Ministry of Defence (D/O Defence and Ordnance Factories)

Ministry of Home Affairs (D/O Home Affairs)

Ministry of Railways


Estimating the Compensation Package for Government Employees and the Cost to the Government

The aim of the study is to assess the total cost incurred by the Government for Government employees in various grades and sectors. The study will take into account salary, various allowances as well as the other benefits like housing/ HRA, transport facilities/ transport allowance, telephones, free passes/ LTC, bungalow peons/ orderlies, pensionary benefits, free rations (where ever applicable), job security and any other benefits, whether tangible or intangible, provided by the Government to their employees.

The Terms of Reference of Study are as under:

To work out the cost incurred by the Government in paying the pay, allowances and all other benefits whether monetary/ in kind (tangible/ intangible) to their employees and to compute cost per employee to the government in each of the pay scales prevailing in the Government for employees who enjoy these benefits as well as those who do not.

To work out in monetary terms the benefits, whether in form of allowances or in kind, available to the employees in various sectors of the government like Armed Forces, Police, Railways and Posts and to study the efficacy of these benefits in meting their objectives.

To determine the feasibility of evolving a compensation package that would compensate all the benefits presently available in various pay scales/ sectors in purely monetary terms as a more efficient way of compensating the employees.

To study the monetary value that can be attached to security of and the protection under Article 311 of the Constitution available to the Government employees. Whether this can have any impact on the emoluments payable to the Government employees given the fact that the extant rules also preclude an easy exit from a Government job.

The study is being conducted by the Xavier Labour Relations Institute (XLRI), Jamshedpur and is expected to be completed within a period of 4 months.

Team Leader Contact Details:
Prof. R. K. Premarajan Xavier,
Labour Relation Institute
Jamshedpur 831001
Tel. No. 91 – 657 – 2225506 – 12
E mail :


The study would be carried out in the following phases:-
Phase I – Computation of cost using available data with respect to pay and allowances of all government sectors.

Phase II – Assessment of monetary value of tangible and intangible benefits with inputs from recipients and from experts.

Phase III – Assessment of some of the understated benefits of working for the government viz. job security & protection, Article 311, cost of no easy exit, etc. Assessment of monetary value attached to benefits and impact on the pay mix.

Phase IV – Discussion on the efficacy of having all cash pay along with the feasibility of such a pay structure.

Data for the purpose of the study will be collected in two parts namely, primary and secondary. Primary data will be collected with the purpose of arriving at the efficiency and efficacy related conclusions through interviews, questionnaires and focus group discussions. Secondary data will be obtained through records, reports, statements, rules and regulations currently in force. This will enable the study to calculate the cost of compensation, both monetary and the cost relating to other benefits.


Study on Terminal Benefits of the Central Government Employees

Long Term Measures for Achieving Reduction in the Liability of the Government towards Terminal Benefits of Central Government Employees.

Aim of the study:

The study, in the light of the existing scheme of retirement benefits of Central Government Employees, including All India Services, Armed Forces personnel and employees of UTs, appointed before 1.1.2004, will make an assessment of the existing and future liability of the Government towards these benefits in the next three to four decades keeping in view the age profile of the workforce and suggest effective ways and means of reducing the budgetary liability on this account. Towards this aim, suitable changes in the existing scheme of terminal benefits could also be suggested.

The Terms of reference of study:

To analyse the expenditure presently being incurred by Government, under the existing scheme of retirement benefits available to Central Government Employees under consideration, make projections thereon and suggest ways to meet this liability.

To see the age profile of existing government employees as had joined before 1.1.2004 and to assess the liability likely to arise towards their terminal benefits in the next three to four decades.
To suggest various options for suitable self sustaining models to finance the pensions of Central Government employees with the final objective that the funds so devised are able to meet substantially the entire pension liability of the Government.
To assess the financial liability that will need to be initially incurred by the government for implementation of such self sustaining models.
The study is being conducted by the Institute for Social and Economic Change, Bangalore and is expected to be completed within a period of 7 months by September 2007.

Team Leader Contact Details:
Dr. K. Gayithri,
Centre for Economic Studies and Policy,
Institute for Social and Economic Change. Nagarbhavi PO Bangalore – 560072
Tel No. 080 23217010
E mail :


The Study proposes a projection of terminal benefits related expenditure and some other options which will be considered after interaction with the stakeholders.

Existing staff details of each category along with their age profile and the terminal benefits, based on its availability, will be collected and used for making estimations for the future. Existing data/projections currently available would be examined and attempts would be made to adopt better methodology. The impact of demographic transition in terms of increasing life expectancy would be meaningfully captured in the study. The study would use appropriate econometric tools that take into account all possible changes while making the estimates.

Sixth Central Pay Commission

The Government of India have been considering for some time past the changes that have taken place in the structure of emoluments of Government employees over the years. Conditions have also changed in several respects since the last Pay Commission made its report in 1997. Accordingly, it has been decided to appoint the Sixth Central Pay Commission comprising of the following:

1 Chairman Mr. Justice B.N.Srikrishna
2 Member Prof. Ravindra Dholakia
3 Member Mr. J.S.Mathur
4 Member-Secretary Smt. Sushama Nath

Sixth Central Pay Commission, 2nd Floor, ICADR Building
Plot No.6, Vasant Kunj Institutional Area, Phase II, New Delhi-110070.