Friday, 13 June 2014

OROP - 12 Jun 14

What did Shri P Chidambaram present in the Parliament?

There is a difference between a Union budget, an Interim Budget and a 'Vote on Account', the third being the smallest of the three. Vote on Account is what Finance Minister P Chidambaram presented in Lok Sabha on Monday 17th Feb 14.

What's a Vote on Account?

When the Union government needs to withdraw any money from the Consolidated Fund of India to cover its expenditure (especially during the time when elections are underway and a caretaker government is in place), it has to seek approval from Parliament.

Article 266 of the Constitution mandates that parliamentary approval is required to draw money from the Consolidated Fund of India.

A special provision is, therefore, made for a 'Vote on Account' by which the government obtains the vote of Parliament for a sum sufficient to incur expenditure on various items for a part of the year. This enables the government to fund its expenses for a short period of time or until a full Budget is passed.

Normally, the 'Vote on Account' is taken for two months for a sum equivalent to one sixth of the estimated expenditure for the entire year under various demands for grants. It can be for a slightly longer period of time (3-4 months) as well. During election year or when it is anticipated that the main Demands and Appropriation Bill will take a longer time than two months, the Vote on Account may be for a period exceeding two months. Most importantly, a 'Vote on Account' cannot alter direct taxes since they need to be passed through a Finance Bill.

So, many who state that the erstwhile Finance Minister presented a budget or even an interim budget are not being factually correct. He just earmarked Rs 500 crore as the initially Cost to the Public Exchequer (CPE)

However since a sum of Rs 500 crore was earmarked towards OROP, it may be assumed that the amount would provide OROP till the main Budget is passed. However, with CGDA having doubts on how to implement the orders of the then Finance Minister and Defence Minister, we continued to wait for some miracle.

Most of us prayed that the miracle would be forthcoming in the meeting taken on 12 Jun 14 by the Finance Minister with additional charge of Defence since the pantheon of the Armed Forces [Chairman CoSC & COAS, CAS, (CNS was away preparing for the PM’s visit to the INS Vikramaditya), COAS-designate & VCOAS, VCNS and VCAS, AG, CoP, AoP, heads of the Pay Commission Cells of the three Services) and Ministry of Defence [Def Secy, FADS, Secretary ESW) CGDA as well as the Secretary Expenditure of MoF] were present. Maj Gen Satbir Singh of IESM, Lt Gen (not Maj Gen) Balbir Singh of IESL, Col Handa of the Disabled Veterans and Col BK Sharma of RDOA completed the solar system.

The same ESM sources indicate that CGDA [actually PCDA(P)] has estimated the CPE to be to the tune of Rs 9000 crore. It is understood that PCDA (P) had proposed average emoluments of 1.1.2006 and 31.3.2013. But CGDA hasn’t disclosed the methodology of arriving at that figure. The formulation begs answers to several questions: - 

Ø     If 1.1.2006 is taken as the base year/date, does the Rs 9000 crore take into account pension arrears already paid consequent to the MoD’s earlier orders communicated through Circular No. 14 (02.01.2013 – Majors 21 years service), No 143 (08.01.2010 - handicapped children), No 453 (22.02.2011), No. 482 (19.04.2012), Nos. 500, 501, 502, 504 (all 17.01. 2013)?  

Ø     Does the Rs 9000 crore take into account that MoD too will have to comply with the orders of the PB, CAT in OA No. 655 etc of 2010 making the effective date of payment of arrears as 1.1.2006 instead?

Ø     If, it does then shouldn’t that amount be outside the PCDA (P)'s calculations because OROP is effective 1.4.2014?

Ø     If Rs 500 crore is an interim amount, wouldn’t the Govt have to provide the balance given the ruling in OA No. 655 of 2010 that once a scheme is announced by the Govt, it is not the remit of functionaries to determine CPE?

Ø     Of the opinion of Ld Attorney General dated 03.09.2013 for  Restoration Rank Pay w.e.f 1.1.1986 in 4th and 5th CPC and its consequent effect on pay bands & Grade pay in 6th CPC on the two issues objected to by MoD, CGDA and DoE, MoF (MoD file No 34 (10)/2013-D(Pay Services refers) ? 

It is understood that Service HQ, thru’ Maj Gen Agarwala, ably aided by AVM Subhani, head of AFPCC projected CPE that was nearer reality. It is understood that the AFPCC (the same guys who proposed the original DGL for Rank Pay, which is, hopefully, two issues away from realisation) prepared the DGL based on real time data of personnel who have retired between 1.1.2006 and 31.3.2014. The data has been put through rigorous ‘quality control checks’ for validation and the figure arrived at is near the truthful amount of CPE.

At this juncture one may wish to ponder how the salary/emoluments will increase by 3% every successive year of  new entrant(s) into a rank as stated by an esteemed ESM ‘leader’ in his epistles to all those who matter.

For example, as per the Special Instructions (for Army, Navy or Air Force), the starting of the pay band for every Lt, every Capt, every Major etc is the same. The start of the pay band for any rank  is not Rs x +3% for a Capt promoted in 2006,  and for a Captain promoted in 2007 Rs x + 2 x 3% etc. Then what is the meaning of annual increment, if an officer promoted in 2007 gets the same pay in the pay band as one promoted in 2006?  

As one expert who helped to put numerical values asked, will a Capt promoted in 2006 start at Rs 10000, and another promoted Capt in 2007 start at Rs Rs 10000 + 3% and so on? Then how did we argue, with numerical examples, in the Rank Pay matter that “as on 1.1.1986” divides  Capts into those of as 1.1.1986 and others of after 1.1.1986?

To return to OROP, it is understood that Service HQ has proposed that “same pay, same rank, same service as on 31.3.2014’ will mean “same pension, same rank, same years of service, (in the ranks + commissioned)” for officers and for Other Ranks “same pension, same rank, same years of service,” for all Groups, the highest pension to be considered.

In conclusion (in true Service writing spirit!), however, the meeting resolved, (if reports from ESM who attended the meeting and are not bound by the “Zip your lips” clause) to meet again to, yes, resolve the issue.

Jai Hind

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