Sixth CPC Report:(v) Calculation of benefit in pay


The uppermost question in everyone’s mind is about the quantum of benefit which would accrue for respective categories of staff. As a starting point the increase in basic pay and arrears payable based on that may be discussed. The final benefits would be subject to approvals and modification by the Government.

A number of calculators are already available on the net and calculations made by them by and large approximate to the expected benefits. However a step by step calculation is attempted here for understanding the process.

For this exercise the following issues can be taken as settled:-

 

(i) The benefit would be admissible from 1st Jan. 2006 . Whether the whole amount is paid in cash or is transferred to savings would be subject to decision by the Central Govt.

(ii) The rate of dearness allowance payable (on date of pay fixation ) shall be equal to the difference between the rate of DA on 1st Jan. 2006 (24%) and rate as admissible on date of pay fixation. DA as on date is admissible @ 47% . The difference as on date is 47-24=23%

(Warning :Subsequent comments on this post indicate that this assumption may not be correct and a new formula based on a new index may be adopted, which will reduce the quantum of benefits)

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(iii) The dearness allowance under the new scales shall be payable on basic pay +grade pay .

(iv) Arrears shall be calculated taking into account six monthly increases in DA for the intervening period as shown in the table above.

 

(v) The report visualizes accrual of increment on 1st July 2006 , 2007 & 2008 and one increment should accrue due to pay fixation from 01/01/06. Therefore minimum of three increments (=7.5% of basic pay as fixed on 1st Jan 2006) would have become due at the time of pay fixation.

(vi) Since increments are to be released @2.5% of the basic pay annually ,an increase of 7.5% (three increments) may be expected due to accrual of increments at the time of pay fixation.

(vii) For the purpose of pay fixation the calculations are to be made by cross matching the basic pay being drawn with the pay and grade pay which would now be admissible with the help of table 2.2.2 shown at page 54 -70 Chapter 2 of the Report of Sixth CPC .

An illustration may be considered.

Let us consider the case of an officer in the pay scale of Rs.14300-18300 /- who is having basic pay of Rs.15500 /- at present. On 01/01/06 his basic pay would be Rs. 14700 /-. The table applicable to officers in the scale of Rs. 14300-18300 /-corresponds to Pay Band PB-3 which covers Gr. A Services of this category .

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Salary under the old Pay Scales:Since at present the officer would be drawing basic pay of Rs.15500/-.Dearness Allowance calculated @47% on (Basic pay + Dearness Pay) would be payable . DA thus calculated is Rs10927/-.

Total pay on 01/01/08 under old Scale would be (15500+7750+10927)= Rs 34177/-

Salary under the new Pay scale:

As per the above table on 1st Jan.2006.the officer would be entitled to basic pay of Rs. 25580/- and grade pay of Rs. 7600/-in the new scale which would total to Rs 33180/- Increments @ 2.5% (Rs. 830/-)each would be due on 1st Jan. 2006 ( for pay fixation) , 1st July 2006 & 1st July 2007 .

Pay hike due to increase in rates of DA shall be @ 5% wef 1st July 2006 , @6% wef 1st Jan 2007, @ 6% wef 1st July 2007 and 6% wef 1st Jan 2008, Totaling to 23% on date.The following increase may be assumed in the pay of the employee

(i)Basic Pay + grade pay in new scale as on 01/01/06 =Rs. 33180/-

(ii) Adding three increments @ 7.5% (Rs.830/- eachX3)=Rs. 2490

(iii) Pay after adding increments =Rs. 36670/-

(iv) Increase in DA as payable @ 23% =Rs.8434/-

(v) Total Pay on Date in new Scale of Pay = Rs.45104/-

The monthly increase is coming in the range of Rs. 11000/- per month which appears to be a bit unrealistic. If any corrections are suggested, the same would be welcome. At this rate the arrears payable may be in the range of{ Rs.8000/- (average. diff in pay) X 30} which accounts for intervening two and half years.

(If we take only two increments in this period then the jump as on date may be in the range of Rs.9000/- pm only and average increase may be Rs.6500/- pm). Those desiring exact amount of arrears may wait for some time till reliable calculators are available on the net.

Alternatively by following the above method and calculating increase based on six monthly increase in DA and annual increment in pay details can be worked out .

Some Exceptions

(i) Promotion or change of Scale of Pay between 01/01/06 and fixation of new pay

Such employees would be allowed choice of refixation of pay from the date of subsequent change in the scales of pay and would get benefit of matching pay & grade pay.

(ii) Cases of new recruitments: Pay & Grade Pay of such employees shall be fixed at the lowest pay and grade pay in the corresponding pay band. However they will get benefits of increments. For calculating the number of increments the number of years required to move from the entry grade post in the pay band to the stage of pay in the recruitment scale shall be calculated as per DOPT OM Dt. 25/5/98 (or any amended instructions applicable on the date).Number of increments shall be equal to number of such years . (If it is a bit confusing pg.52 of Chapter 2 in the report may be accessed.)

Next post : Sample calculations for Gr. B,C & D employees.

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Sixth CPC Report:(iv) Pvt. Vs. Govt. Sector

There have been varied responses from the Government employees to the Report of the Sixth Central Pay Commission. There are very few reactions which express satisfaction. Majority of the employees all over the country seem to be unhappy with the recommendations and have termed the recommendations as insensitive and insufficient to their needs. The frustration seems to stem from the fact that the expectation of getting salaries “at par with the private sector “ have not been met as per their interpretation of the Report. What has been overlooked is that the Commission has made sincere efforts to meet this expectation. It has tried to balance the demand with the mandate given to it for transforming the Government workforce into a modern and efficient organization.  

The Commission Report says that it has attempted an in-depth study into working of the private sector and noted that the compensation structure in the private sector is quite different as compared to Government sector. Since the establishments in private sector primarily work for commercial purposes the employee‘s cost is compared to the business worth. Such comparison is not feasible in Government jobs obviously for the reason that the Government sector is primarily service oriented. Also the variation in range of salaries in private sector  is quite wide .

On comparison with Government sector it noted that the salaries can be said to be definitely better in private sector only in reference to jobs which can be compared to Group A services . However in that respect the prestige and challenge offered by the Government jobs is also quite high and the Government jobs also provide incentives by way of compensatory allowances, housing and transport facilities etc.. The biggest advantage offered by a Government job is the job security attached to it and the assured retirement benefits. Commission has attempted to make the retirement benefits more attractive.  It has thus attempted to harmonize the tangible and intangible benefits offered by the two sectors for achieving some element of parity. 

For tackling the demand of the Government employees for making the minimum salary in the range of Rs. 10000/- per month the Commission has followed a multi pronged approach. Firstly it worked out the minimum monthly requirements for the family of lowest paid employee It has based it’s calculations keeping in view recommendations of the 15th International Labour Conference . The expenses when calculated on a family size of three units which is the expected family size for a job entrant came out in range of Rs.5500/-per month.   

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          (Source: table 2.2.1 Pg.53 Chapter 2 of Sixth CPC Report)

Thereafter the pay scales were fine tuned to make the minimum salary in the range of Rs. 6600/- in order to make the same approximate to the minimum needs of the lowest paid employees. Commission feels that the addition of HRA and other allowances would make it some where in range of Rs.10000/- as was demanded.  

However simultaneously it also had to ensure that the relief is not considered as a windfall gain for the employees. It has therefore suggested transformation of the lowest paid employees into multiskilled workers whose skill levels could justify the higher wages. The Commission has therefore recommended that the Group D employees be converted to Group C employees in those cases where they fulfill the qualifications prescribed for Group C posts.

This would ensure that they not only get higher wages but also handle higher responsibilities. The employees who do not possess the minimum qualifications should be trained for skill up gradation and subsequent transition to Group C posts. Recruitment to Group C posts is proposed to be stopped forthwith. 

Next post: Estimation of benefits in real terms

Sixth CPC Report: (iii) Concepts of Pay Band, Grade Pay , Performance Linked Incetives

The Sixth Pay Commission has brought about certain significant changes in the pay fixation methodology. The newly introduced concepts are (i) Running Pay Bands (ii) Grade Pay (iii) Performance linked incentives.  The concept of running pay bands although familiar to Armed Forces is proposed for the first time in respect of civilian employees. Running Pay bands were earlier recommended for Armed forces by Fourth CPC but were again replaced with regular scales by Fifth CPC. The Commission has attempted simplification of pay structure by reducing the number of pay grades to 20 against the prevailing 39 scales.

These reduced numer of pay scales (now referred as grades) have been clubbed together to form several distinct pay bands named as -1S,PB-1,2,3,4.    Pay band –1S (Rs. 4400/–7400/-) corresponds to Group D scales marked as S-1 to S-3 by the Fifth CPC . The Commission has recommended gradual absorption of such employees in Group C posts and also recommended that no further recruitments be made in this scale of pay. The Scale would thus be phased out with passage of time. It has 3 grade pays in it’s span. 

The next Pay Band PB-1 (Rs.4860/- -20200/-) covers the Group C Scales which were classified  by fifth CPC as S-4 to S-8. PB-1 has 5 distinct pay grades within it. 

 PB-2 (Rs.8700/–34800/-) covers the Gr. B employees ( S-9 to S-15 Scales of Fifth CPC).  It includes 4  pay grades within it.

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 PB-3 (15600/–391000/-) is the Pay Band corresponding to Group A services and has  a total span of 32 years. The old scales covered by the Band are S-16 to S-27. It has total of 8 grades embedded in it’s span. 

PB-4 (Rs.39200/–67000/) corresponding to Super time Scale covers S-28 to S-32 Scales of Fifth CPC and has 3 distinct grade pays corresponding to various stages of movement of the employee. 

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Apex Scale (Rs.80000/-) corresponds to erstwhile scale of S-33 which is the pay Scale designated for officers of the rank of Secretary Govt. of India. The Cabinet Secretary’s Scale (Rs. 90000/-) corresponds to S-34 Scale of Fifth CPC. 

The Commission expects that the concept would lead to elimination of hierarchies and weed out several pay scales which had lost relevance. The concept of a continuous pay band would obviate anomalies which are generated at the various stages of pay fixation . It would also prevent stagnation in those cases where an employee has reached the maximum of his pay scale. It has been pointed out that when the recommendations of the Fifth CPC were implemented several employees reached the maxima of respective pay scales immeadiately. such a situation is required to be averted. In the proposed system any officer reaching maximum of Pay Band would be automatically rolled over to next Pay Band subject to the condition that the original grade pay would not change unless the official is formally promoted to higher Pay Band.   The Commission has tried to maintain the increase in scales to the approximation of 74% which is the % increase of DA which was admissible on 1/1/06 in the pay scales of Fifth CPC. 

Concept of Grade Pay:-In order provide fitment benefits in the new pay scales and also to provide for a hierarchy based structure for the various Pay bands the Commission has introduced the concept of grade pay. The grade pay for various stages have been fixed on basis of the span of original pay scale covered as well as the nature of the Fifth CPC  pay scale of the beneficiary. The grade pay has been fixed in the range of 40% of the maximum of the pre revised scales (of Fifth CPC). It would change in course of time when a promotion takes place within the pay band or to the next pay band. It would also help in earmarking posts against different grades depending on the job requirement. The Grade Pay would also be taken as part of the pay for calculation of allowances including DA. 

Performance linked Incentive Scheme have been conceived for PB-3 which covers the group A Services . The scheme suggests a higher rate of increment (3.5%) for good performers against standard rate of 2.5% per annum. It has been suggested that not more than 20% officers in a cadre should be covered with the higher increment category. The Commission considers this to be an innovative measure for promoting efficiency in Services. 

Other innovations : The Commission has maintained a ratio of 1:12 in the minimum to maximum salary. It has also suggested that henceforth all increments be released on 1st of July. 

Sixth CPC Report: (iii) Concepts of Pay Band, Grade Pay , Performance Linked Incetives

The Sixth Pay Commission has brought about certain significant changes in the pay fixation methodology. The newly introduced concepts are (i) Running Pay Bands (ii) Grade Pay (iii) Performance linked incentives.  The concept of running pay bands although familiar to Armed Forces is proposed for the first time in respect of civilian employees. Running Pay bands were earlier recommended for Armed forces by Fourth CPC but were again replaced with regular scales by Fifth CPC. The Commission has attempted simplification of pay structure by reducing the number of pay grades to 20 against the prevailing 39 scales.

These reduced numer of pay scales (now referred as grades) have been clubbed together to form several distinct pay bands named as -1S,PB-1,2,3,4.    Pay band –1S (Rs. 4400/–7400/-) corresponds to Group D scales marked as S-1 to S-3 by the Fifth CPC . The Commission has recommended gradual absorption of such employees in Group C posts and also recommended that no further recruitments be made in this scale of pay. The Scale would thus be phased out with passage of time. It has 3 grade pays in it’s span. 

The next Pay Band PB-1 (Rs.4860/- -20200/-) covers the Group C Scales which were classified  by fifth CPC as S-4 to S-8. PB-1 has 5 distinct pay grades within it. 

 PB-2 (Rs.8700/–34800/-) covers the Gr. B employees ( S-9 to S-15 Scales of Fifth CPC).  It includes 4  pay grades within it.

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 PB-3 (15600/–391000/-) is the Pay Band corresponding to Group A services and has  a total span of 32 years. The old scales covered by the Band are S-16 to S-27. It has total of 8 grades embedded in it’s span. 

PB-4 (Rs.39200/–67000/) corresponding to Super time Scale covers S-28 to S-32 Scales of Fifth CPC and has 3 distinct grade pays corresponding to various stages of movement of the employee. 

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Apex Scale (Rs.80000/-) corresponds to erstwhile scale of S-33 which is the pay Scale designated for officers of the rank of Secretary Govt. of India. The Cabinet Secretary’s Scale (Rs. 90000/-) corresponds to S-34 Scale of Fifth CPC. 

The Commission expects that the concept would lead to elimination of hierarchies and weed out several pay scales which had lost relevance. The concept of a continuous pay band would obviate anomalies which are generated at the various stages of pay fixation . It would also prevent stagnation in those cases where an employee has reached the maximum of his pay scale. It has been pointed out that when the recommendations of the Fifth CPC were implemented several employees reached the maxima of respective pay scales immeadiately. such a situation is required to be averted. In the proposed system any officer reaching maximum of Pay Band would be automatically rolled over to next Pay Band subject to the condition that the original grade pay would not change unless the official is formally promoted to higher Pay Band.   The Commission has tried to maintain the increase in scales to the approximation of 74% which is the % increase of DA which was admissible on 1/1/06 in the pay scales of Fifth CPC. 

Concept of Grade Pay:-In order provide fitment benefits in the new pay scales and also to provide for a hierarchy based structure for the various Pay bands the Commission has introduced the concept of grade pay. The grade pay for various stages have been fixed on basis of the span of original pay scale covered as well as the nature of the Fifth CPC  pay scale of the beneficiary. The grade pay has been fixed in the range of 40% of the maximum of the pre revised scales (of Fifth CPC). It would change in course of time when a promotion takes place within the pay band or to the next pay band. It would also help in earmarking posts against different grades depending on the job requirement. The Grade Pay would also be taken as part of the pay for calculation of allowances including DA. 

Performance linked Incentive Scheme have been conceived for PB-3 which covers the group A Services . The scheme suggests a higher rate of increment (3.5%) for good performers against standard rate of 2.5% per annum. It has been suggested that not more than 20% officers in a cadre should be covered with the higher increment category. The Commission considers this to be an innovative measure for promoting efficiency in Services. 

Other innovations : The Commission has maintained a ratio of 1:12 in the minimum to maximum salary. It has also suggested that henceforth all increments be released on 1st of July. 

Sixth CPC Report:(ii) Benefits for All India Services

Chapter 3.2 of the Report deals with All India Services. The three All India Services namely Indian Administrative Service (IAS) , Indian Police Service (IPS) and Indian Forest Service (IFS) owe their origin to the mandate given to the Parliament under Article 312 of the Constitution. The recruitments for IAS & IPS are made by UPSC based on competitive examinations held annually. The Recruitment for IFS is made through separate All India Examination. The Commission’s report has given due appreciation to the importance of All India Services and observed that innovative measures are necessary for ensuring that these services are able to deliver to the best possible extent.

The Commission has observed that the supremacy of IAS over the other All India Services has to continue as per the trend which started from the times when the First Central Pay Commission submitted it’s report. It has noted that the Fifth CPC had also held the same views in this context. While coming to this conclusion it has taken note of the wide ranging exposure to challenging assignments that the officers of this service experience over their career.

Regarding the competition with private sector salaries the Commission’s observations are that despite the difference in pay package the IAS due to it’s unique status in the scheme of governance continues to draw the best talents. A large number of young men and women who join the service are professionally qualified and have in many cases given up economically rewarding jobs to join IAS because of the challenges and prestige attached to the service. The IAS officers have been given an edge in the pay scales at the entry stage in view of the tough and challenging atmosphere that they have to encounter from the initial stage of service. The edge given by the Fifth CPC in different pay scales had in monetary terms ranged from Rs.650/- to Rs.800/-. In the recommendations for the Sixth CPC the grade pays recommended for IAS have been made slightly higher in comparison to grade pay for other services by Rs.400/- for Senior Time Scale, Rs. 900/- for Junior Administrative Grade and Rs. 700/- for NFSG (Non functional Selection Grade). The benefit would continue throughout their career due to proposed nature of pay scales known as pay bands.

For the Indian Police Service a major recommendation is for up gradation of posts of Director Generals (DGs) in all the five Central Para Military Forces (CPMFs) to revised scale of Rs. 80000/-. The Commission feels that this step would ensure continuity in the Services and create an atmosphere conducive to planning for long term reforms in these forces . For the Indian Forest Service (IFS) up gradation of similar nature has been recommended for the Post of Director of Indira Gandhi National Forest Academy (IGNFA).

The most popular demand raised by the IPS was for removal of the post of DIG which is covered by Super Time Scale of Rs.16400/-.Commission noted that the post of DIG is a functional post in most of the States as well as in CPMFs. In several States the range is headed by DIG. It has recommended that the post be continued. The officers in the Forest Service had made a similar demand for the Post of Conservator of Forests. The demand has been found unacceptable on similar grounds. Commission has also recommended that the relative hierarchical structure recommended by the previous CPC should continue in the IFS.

Sixth CPC Report :(i) Dearness Allowance

The Sixth Central Pay Commission (CPC) has devoted fourth chapter of the report to the subject of Dearness Allowance (DA) payable to government servants. The sanction of Dearness Allowance is at present based on calculated six monthly increase in the All India Consumer Price Index (Industrial Workers) (AICPI-IW) with base year 1982=100. At the time when the scales granted by Fifth CPC came into existence (1st Jan.1996) this index stood at 306.03.

Fifth CPC started with calculation of DA @ 0% . from 1st Jan.1996 . In the month of April 2004 the rate at which DA was admissible had crossed the figure of 50% and therefore based on recommendations of the Fifth CPC 50% DA was merged in the basic pay . This addition to basic pay was known as Dearness Pay. .Thereafter every increase in DA was calculated on (Basic Pay + Dearness Pay). It has been observed that since after the merger of dearness pay with basic pay the base for calculation of increase in AICPI was not changed the neutralization in cost of living was presently being done at a rate higher than 100%.

Commission has pointed out that the present method of calculation for increase in cost of living takes into account the price rise in a group of identified commodities. It has compared the relative merits of “chain based” and “fixed base” methods of calculation of estimated growth in cost of living. The AICPI as stated above is based on the increase in cost of a basket of identified commodities. In the fixed base method the calculations are based on the assumption that consumer would adjust his consumption needs in relation to increase or decrease in prices of the constituent commodities. The chain based method takes into account the possibilities of change in consumption pattern due to availability of wider range of consumption goods and the improvement in the quality thereof due to economic growth. The latter methodology has been considered to be more relevant in today’s economic scenario.

However the basic data for the pattern of consumption in respect of several essential commodities would have to be compiled through a detailed all India survey if this methodology is to be adopted . The previous Pay Commissions had different views on this matter. The Fourth CPC favored evolution of a separate index for calculation of cost of living for the government servants. The Fifth CPC however felt that such index would also suffer from imbalances since consumption patterns of various categories of employees would be different. The Sixth CPC has suggested a sample survey through National Statistical Commission for evolving an index based on consumption pattern of government employees. Till this exercise is completed the present methodology of calculating the increase in cost of living and calculation of DA would continue.

Report of Sixth Pay Commission:who gets what

The Sixth Central Pay Commission (CPC) Report was out in the afternoon and simultaneously the work force in sarkari establishments went into jubilation. Calculators were brought out and the humble pay clerk in the office became the most sought after person to facilitate estimation of how much bucks would flow in whose kitty. Euphoria of this kind is a regular occurrence after announcement of pay benefits but is short-lived till the actual calculations are made. The rapid rise in market prices and also the amazing growth of salaries in private sector soon overtake the government pay scales.  

On this  occasion the media is all agog with the overestimated projections of benefits and for days together it goes on repeating the imagined negative impact on the national economy. The media forgets the fact that journalists also look forward for wage increase and as compared to the increase in every other sector the Government servants get a modest jump in pay every ten years . It is also forgotten that the economic impact on budget which is sought to be over hyped is the  only decadal benefit offered to millions of families of government servants who are also fellow countrymen and have a right to share the national wealth.  

A quick glance at the report and projected pay scales (now referred to as pay bands) shows that on an average a government servant would get additional financial benefits which would be in the range of 40% of the existing basic pay. Even the top salaries of Secretary in Govt. of India and Cabinet Secretary which appear to be quite high in real terms are likely to increase  to that extent only. 

The real indicators of improvements in working conditions as reflected in the report of the Pay Commission  are the measures suggested to take care of female employees, group D employees, physically challenged employees and the pensioners. The Commission has also suggested improvements in the allowance and compensation packages for army men. For healthcare it has proposed Health Insurance Schemes at places where CGHS facilities are not available. 

For the women employees the facility of maternity leave is extended to six months against existing three months and concept of flexible working hours has also been brought in. The suggestions if accepted would certainly be considered as a very progressive gesture on part of a caring employer. 

In respect of the lowest paid employees presently classified as Group D employees the Commission has suggested their upward mobility to Group C in case they fulfill the educational qualifications . Those who do not possess the requisite qualifications are proposed to be trained to rise to Group C in due course of time. The Commission seeks to transform them into multi skilled persons. Attention of this nature  on workforce on the lowest rung of ladder was also  long overdue.  

For the physically challenged employees the concept of flexible working hours has been introduced. The Commission has also proposed measures which would facilitate their access to good quality aids and appliance which would help them overcome the respective disabilities in a better manner. Other benefits which have been proposed are higher rate of transport allowance and subsidy in the loan for purchase of car @ 4%. 

Retiring Govt. employees can now expect a higher quantum of gratuity (an amount equal to 15 Months emoluments at the retirement stage). The ceiling of Rs. 3.5 Lakhs has been proposed to be raised to Rs. 10 Lakhs. Another innovative measure suggested for helping the retired employees is increase in pension at various stages between 80 to 100 years of age. It is proposed to increase the benefit @ 20% for 80 year olds and thereafter @ 20% for each slot of subsequent 5 years. This has been justified on grounds of increased expenses on medical facilities in old age and is a very well thought gesture. 

For improving the morale of army men additional compensation in case of casualty has been proposed. The Commission has also suggested additional pay for those in line of service. 

As a part of system improvement the daily allowance for officers on tour has been made more realistic so that the govt servants on duty can stay in comfort. Officers availing LTC have been permitted air travel if they are entitled for the same for official tours. Leave encashment procedure for LTC has also been liberalized. 

The major indicator of structural reforms made by the Commission is reduction in  the number of pay scales . The Commission has also introduced the concept of pay band by clubbing  a number of scales into a long running scale with grade pay as mark of identification of seniority. The Commission expects to iron out several anomalies by introduction of this concept. Another new concept introduced by Commission is concept of differential increment rate based on performance. Unlike other measures this suggestion may not be met with enthusiasm since performance appraisal in public services is still a grey area which is not yet truly modernized.