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61177 Reply from TRIPAS received on 13 Oct 2014
Telephone: 23011257 & 23011630
Tri Service Pay Staff (TRIPAS)
Room No. 116, Kashmir House
New Delhi – 110 011
C/7026/VIIth CPC/Vol-III 10 Oct 2014
INFORMATION AND DOCUMENTS FURNISHED TO 7TH CPC
1. Please refer to RTI online request No. MODEF/R/2014/61177 dated 30 Jun 14 addressed to MoD D (RTI) and MoD letter No. 21/4/2014-D (PCC) dated 03 Sep 14.
2. Copy of information/documents submitted by TRIPAS on behalf of three Services to 7th CPC till the date of RTI application submitted by you are forwarded herewith as indicated below: -
(a) Response to Questionnaire vide this office note C/7026/VIIth CPC dated 25 Jun 14.
(b) Details of allowances paid to Defence Services vide this office note C/7026/VIIth CPC dated 12 Jun 14.
3. It is requested that receipt of this letter be acknowledged.
(V S Chauhan)
Encl: as stated above
Copy to: -
MoD D (RTI) ]
MoD D (Pay Commission Cell) ] for info
B Wing, Sena Bhawan ]
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C/7026/VIIth CPC 25 Jun 14
ADJUTANT GENERAL’S BRANCH
(Tri Service Pay Staff (TRIPAS)
Room No. 116, Kashmir House
REPLY TO QUESTIONNAIRE RELATED TO 7TH CPC
1. Refer to MoD I.D. No. 1 (2)/2014/D (Pay/Services) dated 19 Jun 14.
2. The Defence Services response to the questionnaire forwarded by Secy Seventh Central Pay Commission is forwarded herewith as an enclosure to this note.
3. The information sough vide 7th CPC letter No. 7CPC/21/Secy’s dated 02 May 14 is being complied from the three services and is likely to take some time.
(V S Chauhan)
Encl: as stated above
B Wing, Sena Bhawan
Chairman, Army Pay Cell
ACOP (AC) & Chairman PARC
ACAS (Fin P) & Chairman Air Force Pay Cell – with enclosure
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SEVENTH CENTRAL PAY COMMISSION, GOVERNMENT OF INDIA
(Questionnaire for inviting suggestions/comments from public and other interest groups is in italics)
Encl to TRIPAS Note C/7026/VIIth CPC dated 25 Jun 14
DEFENCE FORCES RESPONSE TO THE QUESTIONNAIRE
1.1 The considerations on which the minimum salary in case of the lowest Group ‘C’ functionary and the maximum salary in case of a Secretary level officer may be determined and what should be the reasonable ratio between the two.
1.1.1. Minimum Salary. The minimum salary at the lowest Group ‘C’ functionary should be enough to ensure that he is able to lead life in dignity in the society. The minimum salary should be based on the following criteria: -
(a) Educational qualifications and skills.
(b) Average family size and the liability that the Government Servant to maintain this family and the wages ought to be paid by the Government as a model employer.
(c) The salary should cater for nutritional requirements, clothing, housing, basic health of all dependants in the family. The salary should comply with all statutory and constitutional provisions.
(d) The salary should not only maintain his standard of living by neutralising inflation during past decade but also pass on the benefits of growth in the economy to the lowest functionary in the Government.
1.1.2. Maximum Salary. The salary of a Secretary in the Central Government should be based on seniority and designation and should have parity with the remuneration being provided to CEOs in the private sector. Secretary in Central Government is similar to CEOs in private sector. Secretary in Central Government is similar to CEO of a large company. In addition, the salary of Secretary in Central Government should be fixed in such a way that it does not lead to stagnation of pay for officers junior to the Secretary as their salaries cannot exceed that of Secretary.
1.1.3. The maximum salary paid to the Secretary should be based on the following criteria: -
(a) The job content, span of control, length of service, contribution to national growth/well being, and the wide experience which a senior officer brings to bear.
(b) Avoid bunching of salaries. At the higher end salaries get bunched up as a result of pre-determined fixed maximum of scale. To illustrate there is marginal difference in the higher end of salaries amongst SAG (Rs 77000 with Grade Pay), HAG (Rs 79000), HAG Plus (Rs 80000) and Secretary scale (Rs 80000). Therefore, in the Defence Forces within a narrow range of Rs 3000 i.e. from Rs 77000 to Rs 80000, there are four pay scales i.e. Maj Gen, Lt Gen (HAG), Lt Gen (HAG+) and Army Cdr/equivalent, which are bunched up.
(c) Avoid Stagnation. Though stagnation has been removed as a result of movement from lower pay band to higher pay band, stagnation does occur at the end of the spectrum in Pay Band-4. This is because automatic transition from Pay Band-4 to higher pay band is not permitted. The problem is more acute in the Defence Forces as Major Generals (SAG) on promotion to the rank of Major General after 32 years of service do not get full benefit of promotion increment and start stagnating at Rs 67000. since no increments are authorised beyond the limit of Pay Band-4.
(d) The maximum salary should not be pre-determined. It should be based on careful analysis of progression of grades to include the residual period in that grade and to ensure sufficient gains on each promotion.
(e) Attraction and retention of talent. This is essential to prevent flight of human capital from the Government service to the corporate sector. This aspect is covered in detail in the response to Questions 3.11. to 3.13.
1.1.4. Minimum-Maximum Ratio (Disparity Ratio). The disparity ratio is an artificial concept which needs to be discarded. It makes the lowest salary in the government as the benchmark and connects all higher salaries to it. Historically, the Disparity Ratio has been reducing across the Pay Commissions. From 54.5 in the First CPC, it had come down to 10.9 in the Fifth CPC, before increasing marginally to 11.43 in the Sixth CPC. When there is no relationship in the skill levels, expertise, qualifications between lowest and highest posts, why should these salaries be connected with an artificial formula? It is suggested that four cardinal points in the salary structure be determined independent of each other. The entry level salary of NCs (E) with a Grade Pay of Rs 1800, highest salary of Subedar Major (Grade Pay Rs 4800), entry level salary of Group ‘A’ and the salary at the Apex level be determined based on the requirements of attracting and retaining candidates with the desired skills. If Disparity Ratio is to be computed, it should only be computed within a particular group and not between Apex scale and entry level of Group ‘C’ employees. For example, Disparity Ratio should be considered within Group ‘C’ (or Pay Bands 1 & 2), Group ‘B’ (Pay Band 3) and Group ‘A’) (Pay Band 4) separately.
1.1.5. If the concept of Disparity Ratio is to be retained, then it will be worthwhile to compare India’s standing internationally. For this we may uses CIA Gini Coefficient as a comparator. Gini Coefficient is used to measure the statistical dispersion intended to represent the income distribution of a nation’s residents. It is worth noting that India has a Gini Coefficient of 36.8. A lower Gini index is an indicator of lower disparity ratio and vice versa. When we compare this with the indices of other developing countries e.g. BRICS, India’s index is the lowest as compared to Gini Coefficients of Brazil (50.8), Russia (41.7), China (47.4) and South Africa (65.0). The Indian index is also much lower when compared with indices of certain other relevant countries like Argentina (45.8), Hong Kong (53.7), Iran (44.5), Japan (37.8), Mexico (51.7), Nigeria (43.7), Philippines (44.8), Singapore (47.8), Sri Lanka (49.0), Thailand (53.6), Uganda (44.3), UK (40) and USA (45.0). It is, thus, evident that there is scope for Gini Coefficient of India to go up and consequently the disparity ration to go up to at least 14.
1.2 What should be the considerations for determining salary for various levels of functions falling between the highest level and the lowest level functionaries?
1.2.1. The considerations for determining the salary of all intervening levels should be based on the following: -
(a) Education qualifications and professional pre-requisites.
(b) Skills required
(c) Leadership, span of control, intensity of control and unique terms of engagement (e.g. willing participation in mortal combat in case of Defence Forces). In addition, there are other disadvantages too faced by Defence Forces Personnel which are detailed in response to question 8.13.
(d) Job content, its degree of difficulty and complexity, at each successive higher level of authority and responsibility in decision making.
(e) Pay scales should make a distinct difference in the emolument structure of an individual on each promotion.
(f) The pay bands should be sufficiently wide to prevent stagnation.
(g) Optimum utilisation of the pay bands. To illustrate, JCOs of the Defence Forces are in Pay Band 2. However, the highest ranking JCO i.e. the Subedar Major does not even cross the maximum of Pay Band 1 (Rs 20, 200) due to short span of service. A more realistically designed Pay Band would have enabled the JCOs to earn higher pay in keeping with their rank, responsibility, and length of service.
(h) Avoid stagnation. While stagnation is avoided in Pay Bands 1, 2 and 3 due to low utilisation of Pay Bands, the reverse is the true in Pay Band 4 and above. Here as a result of pre-determined maximum of the pay scale stagnation is rampant, thus defeating the very purpose of introducing running Pay Bands by VI CPC. Hence there exists a need to increase the overall disparity ratio.
(j) Above all, the salary structure should be able to attract the right candidates and retain competent employees at all levels, while maintaining their rightful status in society. For example, in Defence Forces, it is of utmost importance that those recruited have the right motivation and calibre (not discards of civil sector/private sector employment) so that nation’s security paradigm is in safe hands.
2.1 Should there be any comparison/parity between pay scales and perquisites between Government and the private sector? If so, why? If not, why not?
2.1.1. The question seeks comparison/parity between pay scales and perquisites in the Government and public/private sector. The issue needs to be analysed as a whole involving both pay scales and perquisites. The earlier notion that Government servants enjoy more perquisites and pension and hence their pay scale could be kept lower than the private sector no longer holds good. In the race to attract the best talent at all levels, the private sector too offers perquisites which are at par with the Government sector. In fact in aspects such as housing, travel incidentals, bonus (employee stock options), medical benefits (insurance) etc, the private sector may be offering better perquisites than the Government sector. This leads to the obvious inference that there is need to compare the total compensation/benefits available to the Government servant with that of the public/private sector. The notion that Government salaries need to be kept low thus needs to be dispensed with.
2.1.2. A far as Defence Forces Personnel are concerned, the wide gap between emoluments offered by private sector and salary/allowances admissible within Government, coupled with easier lifestyle in civil as compared to harsh deprivations of service life, has led to increasing exodus of high calibre service personnel to private sector, a fact which can be empirically established. Almost all Service personnel who quit the Forces join the private sector. Thus, there is a need to establish at least a semblance of parity between pay and allowances offered by the private sector with defence sector.
2.1.3. Security of Tenure. In today’s era of liberalisation and globalisation, security of tenure is not as overriding an issue as it was in yester years. In fact in the private sector job hopping is resorted to secure accelerated career progression. The flight of human capital from the Government sector to private sector also underlines this trend. Moreover, for Defence Forces security of tenure in a station is extremely low due to frequent postings which could be every one-two years for officers, further aggravated by very early retirement age for rank and file.
2.1.4. In the light of the above, there are valid grounds for a fair comparison of salaries between Government and private sector.
2.2 Should there at all be any comparison/parity between pay scales and perquisites between Government and the public sector? If so, why? If not, why not?
2.2.1. Due to availability of much superior employment and economic opportunities, youth today opts for a lifestyle with less hardships and superior financial returns and perks. The pecking order for the youth is thus clear – Private Industry/Corporate sector first, followed by Public sector undertakings or academic institutes followed by Government sector (within Government sector, Armed Forces occupy a still lower echelon). Thus, apart from comparing salaries of private sector jobs, comparison with public sector jobs (PSU, banks etc) has become equally important.
2.3 The concept of variable pay has been introduced in Central Public Sector Enterprises by the Second Pay Revision Committee. In the case of the Government is there merit in introducing a variable component of pay? Can such variable pay be linked to performance?
2.3.1. The issue has been examined by earlier Pay Commissions. The V and VI CPC made substantive recommendations on performance related increments. However, schemes like PRIS could not be implemented as such schemes may have detrimental effect on the organisations in terms of affecting the team spirit and cohesion. Unlike the civil services, the Defence Forces have a steep pyramidal structure where organisation effectiveness is totally dependent on team work, empathy and camaraderie. Hence variable pay is not recommended for the Defence Forces. Instead, what is required is adequate increments/monetary incentive on promotion which would, indirectly serve as variable pay.
3. Attracting Talent
3.1 Does the present compensation package attract suitable talent in the All India Services & Group A Services? What are your observations and suggestions in this regard?
3.1.1. On the question of whether the compensation package enables attraction of suitable talent in the Defence Forces is concerned, the answer is an emphatic NO. The issue of attraction of suitable talent needs to be seen from two different perspectives. The attractiveness of the Armed forces amongst the youth of the country is on a progressive decline. The extensive media campaign by the Armed forces to meet their recruitment targets amply exemplifies the crisis being experienced by the Armed Forces. While such aggressive advertisement campaigns have been able to partially overcome the shortages in terms of quantity, they have not been able to attract the desired quality of manpower. This situation is likely to worsen with the improvement in the economic scenario over the next few years.
3.1.2. Attractiveness of Defence Forces as a Standalone Entity. The Defence Forces are not able to attract talent due to a variety of factors as follows: -
(a) Risk and Deprivation Factor. Threat to life, truncated careers, separation from families, constrained career prospects, frequent transfers, ‘reserve’ liability, restriction of fundamental rights, harsh and daunting work environment, isolation, and deprivation are the obvious and upfront constraints which are generally known. But the not so obvious and not so explicit are the resultant disadvantages which include the constrained education levels of Armed Forces children, their inhibited emotional growth and mental turmoil owing to frequent absence of the fathers. Separation imposes a disconsolate barrier to the conjugal life and professional growth of the soldier’s spouse. The ever-present premonition of impending calamity and threat to life leaves a lasting and negative impact, not only on the soldier but his entire family. Truncated career is perhaps the most disparaging disadvantage the military personnel face. A soldier devoid of the benefits of service, at ages varying from 35 to 50 years of age, when his family responsibilities are at its zenith. He consequently draws a significantly lesser total pay in his entire service life span than any other Government servant and left to cope with a long and arduous retired life, all alone. In a materialistic environment, the tendency of the youth to opt for a low paying and risky job is extremely low. This aspect is reflected in the large deficiency in the officer cadre too.
(b) Lowering of Status/Erosion of Historical parities. Attractiveness of a career is a function of pay, perks and status. While there is little scope to obviate drawbacks of tangible and intangible deprivation, risks and hardships that are borne by personnel of the Defence Forces, the steady erosion in historical parities in pay, status and glamour is reducing the attractiveness of the Defence Forces.
(c) Better Compensation in Private Sector. Post liberalisation, the availability of high paying jobs in the private sector has increased exponentially.
(d) Together these lead to reduced intake both in terms of quality (both officers and men) as well as quality (applicable to the officer cadre).
3.1.3. Attraction of Defence Forces vis-à-vis AIS/Group ‘A’ Services. Even when compared to civil Government employment, the attractiveness of the Services rank very low on the scale. Various factors contributing to this phenomenon are as under: -
(a) Inadequate Compensation for Difficult Service Conditions. The tangible and intangible disadvantages of military service are not adequately compensated. There is even a restriction of fundamental and constitutional rights when it comes to Defence Forces Personnel. Apart from the lower life time earning of Defence Forces personnel, as compared to their civilian counterparts, even the compensation for difficult service conditions is paltry i.e. Rs 2000 per month for JCOs/OR.
(b) Loss of Status vis-à-vis Civil Government Servants. There has been an indisputable and steady erosion of status enjoyed by Armed Force personnel, right since independence. Post VI CPC, a High Powered Committee was ordered by the PMO to resolve status/command and control issues between defence Forces and Civil employees. Unfortunately this High Powered Committee has not been constituted till date.
(c) Highly Skewed Cadre Ratios. The percentage of Defence Forces officers in higher ranks such as SAG and above is negligible. This serves as a disincentive to potential recruits. Coupled with low cadre ratios, the Defence Forces have extremely low promotional prospects leading to 95% of the personnel retiring in the ranks of Col (TS)/equivalent. The following table illustrates the glaring inequality in cadre ratios of Defence Forces vis-à-vis Civil employees, the Armed Forces being at the lowest end of the spectrum by a huge margin: -
Gp ‘A’ Weighted average (%)
Armed Forces Existing (%)
(d) Non-Functional Upgradation. To make matters worse, the NFU which has been extended to Civil Services has been denied to the Defence Forces. Thus all Group ‘A’ officers now get promoted to higher grade two years later than the IAS. This dispensation has been denied to the Defence Forces on the specious plea that Services do not fall under the definition of organised Group ‘A’ Services. While the Pay Commissions and Government have thought it proper to address the legitimate aspirations of civil services other than the IAS with alacrity, no such consideration has been extended to the Defence Forces where organisational structure and unique terms and conditions of service place them at the bottom of the matrix. Thus a liberalised scheme (NFU) which the Government extended to civilians has been denied to Armed Forces, an unequal treatment meted out vis-à-vis Civil Services cadre.
(e) Early Retirement. Defence Forces are the only Services where personnel retire by rank. Thus all ranks other than Lt Gen retire at ages varying from 38 years to 58 years. This leads to loss of lifetime earnings both in terms of pay and pension. This forced early retirement is not being compensated in any manner.
(f) Together these deficiencies vis-à-vis Civil Services act as a major disincentive to attract talent in the Defence Forces.
3.2 To what extent should government compensation be structured to attract special talent?
3.2.1. Armed Forces require talented leaders with quick decision making ability, capability to take risks and motivate personnel by setting an example in order to win battles for the country. Technical acumen to employ weaponry with state of the art multidisciplinary technology, imbued with a spirit of gallantry and adventure which leaders must possess in armed forces at all levels. This deserves suitable Government compensation so that suitable ‘Special Talent’ is recruited in Defence Forces. Disconcertingly, today not only is there an absence of any such compensation, but on the contrary a sense of discrimination is evident from the following: -
(a) Disabilities Act. Due to specific requirement of the Armed Forces to have fully fit personnel for combat duties, the Central Government is exercise of powers vested under the provisions of Section 47 of the said Act has issued a notification dated 28 Mar 2002 exempting the combatant Armed Forces personnel from the operation of Section 47 of the said Act. This exclusion has led to some very grave disparity in terms of Armed Forces personnel having no protection of employment due to forced discharge from service on grounds of disability which is at a much higher ratio compared to any other service due to physical/climatic hardships and constant risk. In view of non-applicability of Section 47 of the said Act, personnel of the Armed Forces should be suitably compensated by the Government for forced early discharge from service on grounds of disability.
(b) Non-extension of NFU. Non-extension of NFU to Defence Forces is highly discriminatory. In this connection please refer to response at Para 3.1.3 (d) above.
4. Pay Scales
4.1 The 6th Central Pay Commission introduced the system of Pay Bands and Grade Pay as against the system of specific pay scales attached to various posts. What has been the impact of running pay bands post implementation of 6th CPC recommendations?
4.1.1. The impact of running pay bands and grade pay has had the intended benefits, albeit with limitations. These are discussed below.
4.1.2. Intended Benefit.
(a) Removal of stagnation. In cases of cadres where promotional prospects are very low and employees were earlier stagnating at the top of the pay scale, can now look forward to annual increments.
(b) This enables suitable monetary compensation to Government employees in keeping with their growing social and familial obligations.
(a) While stagnation has been removed in Pay Bands 1 to 3, there is stagnation in PB-4 since transition from PB-4 to HAG scale is not permitted for Armed Forces though it is available under IAS pay rules. In the Defence Forces since there are more ranks in PB-4 vis-à-vis the civil employees, alongwith merger of MSP in the pay on promotion to the rank of Maj Gen the problem of stagnation is acutely felt.
(b) Further the termination of running pay band at SAG level and retention of specific scales at HAG and above results in meagre gains at levels of HAG and above.
(c) It is felt that the concept of Grade Pay primarily provides for additional incentives/increment to an individual on promotion, especially within the same Pay Band. The requirement of Grade Pay therefore is indispensable with the existing system of Pay Bands. Although Grade Pay was envisaged for determining the intra-service hierarchy but practically the same is being used to compare inter-service equivalence. This has resulted in loss of parity and reduction in status for Defence forces. The omission of erstwhile Rank Pay and depressed Grade Pays given to the Armed Forces has further complicated the issue and has resulted in a number of anomalies.
4.2 Is there any need to bring about any change?
4.2.1. As mentioned before, there are severe problems in PB-4. The Pay Bands PB-1 to PB-4 are designed on the basis of civilian organisation and promotion system. They do not cater to the unique cadre/rank structure of Armed Forces and its promotional prospects. Thus a large portion of PB-1, PB-2 and PB-3 are unutilised by Armed Forces personnel while there is stagnation in PB-4. The net effect is of Armed Forces pay structure being force-fitted into civilian pay bands with the result that numerous anomalies have arisen with a surfeit of legal cases.
4.2.2. Presently, Military Service Pay (MSP) is merged in the pay band on promotion to the grade pay of Rs 10000/-. This causes stagnation in the case of Maj Gen and above. The top of the pay band for Maj Gen and above should be higher than the corresponding civilian pay by the amount of MSP. Alternately, Maj Gen on stagnation should be allowed to move to HAG scale. In order to address the imperfections discussed above, there is need to improve the system of running pay bands. Some of the suggestions are as under:-
(a) In order to make a viable difference on promotion, two additional increments should be granted to Defence Forces Personnel. This is especially merited due to their steep pyramidal structure, minimal promotional opportunities, early retirement age and non-utilisation of Pay Bands 1 to 3 as brought out earlier.
(b) The Pay Band 4 for Defence Officers should be based on Rs 37000-73000 (upper (sic) ceiling of Rs 67000 being increased by Rs 6000 to accommodate the MSP). This will resolve a number of anomalies like junior officers today drawing more pay/pension than senior officers (Brigs drawing more pay than Army Cdrs/equivalent in Apex Scale).
(c) The running pay band should be extended to HAG and HAG Plus scales also. The pay scale of a Secretary (i.e. the maximum scale) should lie well beyond such a running pay band.
(d) On stagnation at the top of PB-4, the individual should be permitted to draw pay in HAG scale on the lines of similar provisions for lower pay bands and as available for other Group ‘A’ Services.
(e) The Grade Pay of Commissioned Officers needs to be refixed in conformity with the past parities in spirit of Para 2 (b) of Terms of reference approved for VII CPC and judgments of Hon’ble Supreme Court.
4.3 Did the pay bands recommended by the Sixth CPC help in arresting exodus and attract talent towards the Government?
4.3.1. Failure to attract talent towards the Government or prevention of exodus from Government to private sector is a factor of Government compensation structure when compared to private sector. It is independent of the fact whether Government pay structure is based on specific pay scales or running pay bands. In order to attract talent or prevent exodus, the Government pay structure should be bench-marked against the private sector. In Defence Forces, the problem of exodus to private sector is exacerbated due to acute pyramidal structure. Thus, talented, highly qualified officers who do not get promoted due to non-availability of vacancies in higher ranks quit to join the private sector. This exodus/attrition has not abated and measures need to be devised to retain them in the organisation to prevent loss to the Government.
4.3.2. In light of the above, it is also imperative that strength of support cadre (primarily Short Service Commission (SSC) be increased to balance the ratio between regular cadre and support cadre which is highly skewed towards regular cadre. The objective is to have a large support cadre of SSC officers and a lean cadre of regular officers. This will provide better promotional opportunities for regular cadre officers and arrest their exodus (triggered by low promotion avenues). For a large support cadre of SSC Officers the attractiveness of SSC Cadre has to be increased. Presently, the attractiveness of SSC is limited due to lack of lucrative exit benefits. SSC can be made attractive by considering proposals like Pension under NPS, Severance Package and Lateral Transfer.
4.4 Successive Pay Commissions have reduced the number of pay scales by merging one or two pay scales together. Is there a case for the number of pay scales/ pay band to be rationalized and if so in what manner?
4.4.1. All the past Pay Commissions have tried to reduce the pay scales by grouping number of scales and evolving a new scale for such groups. This has, in many cases, resulted in anomalous situations for inter-se parity which are yet to be resolved. For example, in Defence Forces in multi-cadre environment like MES, amongst peers civilians are in a higher grade than military officers (ADG and Chief Engineer level) while seniors (Colonels) are in the same as their civilian juniors (SE). This has disrupted the functional harmony and is leading to severe command and control problems. Hence, reduction of pa grades or merger of pay scales, if desired, should be carried out scientifically taking into consideration the job content for the merged posts and peculiarity of each service.
4.4.2. Rationalisation of pay scales/grades is an ongoing process for delayering of Government machinery. Probably it is an unavoidable exercise. However, the more important point is to visualise the impact on other Services where such delayering is not feasible or is not being undertaken. In the case of Defence Forces such delayering has had an adverse impact as under: -
(a) The Government pay structure, which is specifically designed for Civil Services, when applied to Defence Forces leads to low utilisation of pay bands, stagnation in higher ranks and marginal gains on promotion.
(b) Further, civilians in pay scales/grades which were earlier lower to Defence Forces come to occupy higher pay scales/grades as invariably lower pay scale/grade pay gets merged with higher pay scales/grade.
(c) In the case of Junior Commissioned Officers and Other Ranks of the Defence Forces the delayering of scales was done by awarding common pay scales with effect from 01 Jan 2006. However, this delayering was not extended to those personnel who were already in service. Hence, in respect of JCOs/ORs multiplicity of scales remain. This has lead to considerable anguish and low morale in these ranks.
(d) Hence any exercise of reducing pay scales/grades without corresponding modification to Defence Forces pay scales/grades leads to hierarchical upheaval which is not conducive to efficiency and is retrograde in a multiple cadre environment.
4.5 Is the “grade pay” concept working? If not, what are your alternative suggestions?
4.5.1. The concept of Grade Pay is an essential element of the running pay band structure. This is so because in a running pay band, an employee keeps rising in his pay band which spans more than one grade. Hence, in order to differentiate between two posts within the same pay band, grant of higher grade pay to a superior post is essential.
4.5.2. Theoretically, the concept of Grade Pay would not have had any problems if the entire Government bureaucracy were to operate in an environment where cadre structure, terms and conditions of service and promotion prospects are similar. However, the reality is different. In the Defence Forces, when operating in a multi-cadre environment, it has been noticed that Grade Pay of two equivalent officers (peers) is different and at places the subordinate civil officers are having higher grade pay on a non-functional basis than their superior, a uniformed officer. This has lead to severe command and control problems in Defence Forces.
4.5.3. Though the VI CPC has stipulated that grade pay would count for status equation only within a cadre, its abuse is rampant for drawing equation on an inter-cadre basis.
4.5.4. Various alternative suggestions are as under: -
(a) Rationalisation of Grade Pay, especially of Defence Forces, in consonance with Civil Services based on length of service.
(b) Abolition of Concept of Grade Pay. This would involve merging of the functional grade pay with the pay in the pay band. On promotion, an individual could be granted additional increments to cover the gap between lower and higher grade pay. Status could be determined with reference to the post held.
(c) Entitlements in respect of housing, transport allowance ad travel etc would be determined on a minimum laid down pay in the pay band in case of above.
5.1 Whether the present system of annual increment on 1st July of every year uniformly in case of all employees has served its purpose or not? Whether any changes are required?
5.1.1. The present system of annual increment on 1st July of every years uniformly in case of all employees has generally served its purpose. However, there is one provision which is inconsistent with the entire scheme. In cases of promotions, if the government employee opts to get his pay fixed in the higher grade from the date of his promotion, he shall get his first increment in the higher grade on the next 1st July if he was promoted between 2nd July and 1st January. However, if he was again promoted between 2nd January and 30th June of a particular year, he shall get his increment on 1st of July next year (Ref MoF O. M. F No. 1/1/2008-IC dated 13.09.2008).
5.1.2. The system is discriminatory against some personnel only based on the date of promotion. Those promoted in the first half of the year lose out vis-à-vis those who are promoted in the second half of the calendar year. It is not clear what the aim of this clause is or what this clause seeks to achieve.
5.2 What should be the reasonable quantum of annual increment?
5.2.1. The quantum of annual increment is correlated with the following: -
(a) Length of the pay band
(b) The minima and maxima fixed
(c) Other factors like increasing responsibilities, social factor, inflation, comparative annual increase in private sector etc
5.2.2. Thus the rate of annual increment should be increased from 3% to 5%. However, such a change cannot be done in isolation without improving the maximum of the pay scale. Increasing the annual increment would definitely lead to more optimal utilisation of pay in Pay Bands 1 to 3. However, it will cause stagnation in Pay Band 4 in an earlier time frame. Hence there is need to sufficiently elongate Pay Band 4 by enhancing its upper limit and thus the need to increase Disparity Ratio.
5.2.3. The increase in annual increment from 3% to 5% is based on the aspirational aspects of Government servants. Unlike in the private sector, Government salaries remain static for a period of 10 years or more. While the private sector salaries get substantial hike in years of economic boom they also benefit from bonuses and ESOPs. The private sector employees are thus compensated to a disproportionately higher level vis-à-vis Government servants. Hence an increase to 5% is considered minimum and inescapable.
5.3 Whether there should be a provision of variable increments at a rate higher than the normal annual increment in case of high achievers? If so, what should be transparent and objective parameters to assess high achievement, which could be uniformly applied across Central Government?
5.3.1. The system of performance related incentives/increments has been recommended by previous pay commissions but it was not accepted by the government. In the light of the history of the issue it appears to be unsuitable to the government sector. However progressive improvements in the percentage of increments over the length of service may be considered. As far as Performance incentives for Defence Forces is concerned, the earlier response at Para 2.3.1 is also relevant.
5.4 Under the MACP scheme three financial up-gradations are allowed on completion of 10, 20, 30 years of regular service, counted from the direct entry grade. What are the strengths and weaknesses of the scheme? Is there a perception that a scheme of this nature, in some Departments, actually incentivizes people who do not wish to take the more arduous route of qualifying departmental examinations/ or those obtaining professional degrees?
5.4.1. The MACP scheme for Defence Forces, applicable to Other Ranks is definitely an incentive and needs to be improved. The reasons for such assertion are as under: -
(a) Defence Forces are rank based organisations and personnel retire at much earlier age – lower rank and lower age of retirement.
(b) The steep pyramidal structure results in very few vacancies in higher ranks and hence the need to attain these ranks before completing their terms of engagement in the lower ranks.
(c) As a result maximum population of the Defence Forces (in Other Ranks) retires in the rank in which they were enrolled, i.e. Sepoy or equivalent. MACP enables them to retire with a pay of Havildar.
(d) Since MACP provides financial upgradations based on length of service, it should continue to remain in force.
5.4.2. In fact there is a need to further extend MACP to four pay promotions (so that Other Ranks do not retire early without availing MACP, as is the case now) and reduce the time for each MACP, due to early retirement ages of NCOs/OR. This will ensure that each NCO/OR enjoys three MACP promotions as is the case in civil. Proposal envisaging four MACPs for Defence Forces at 6, 12, 18 and 24 years will be submitted to VII Central Pay Commission subsequently.
6.1. What kind of incentives would you suggest to recognize and reward good performance?
6.1.1. Promotions are rewards for good performance. Any other element will introduce some undesirable by-products such as de-motivating other employees. It is for this reason that performance related incentive schemes could not be implemented despite substantive recommendations by two Pay Commissions. Since Promotions are just reward for good performance, there is need to look at the Armed Forces promotion system. It is generally accepted by all personnel to be a fair system which is based solely on merit subject to meeting other eligibility conditions. The system is able to motivate all personnel to strive hard and is also able to select best leadership for senior positions.
6.1.2. In the case of JCOs/ORs in the Armed Forces there exists a system of grant of monetary awards in the form of Good Conduct Badge/Good Service Pay and Classification Pay. The Classification Pay is taken into account for calculation of pension. On similar lines, the monetary benefit for Good Conduct Badge may be converted into additional increments for inclusion in the pay structure.
6.1.3. In addition, the financial incentives, associated with gallantry awards should be extended to non-gallantry/distinguished service awards.
7. Impact on other organizations
Salary structures in the Central and State Governments are broadly similar. The recommendations of the Pay Commission are likely to lead to similar demands from employees of State Governments, municipal bodies, panchayati raj institutions & autonomous institutions. To what extent should their paying capacity be considered in devising a reasonable remuneration package for Central Govt. employees?
7.1.1. Since the central Pay Commission makes recommendations based on the performance of the national economy which also includes the States within its purview, it is recommended that the State Governments leverage the CPC awards as a benchmark and recommend their awards in consultation with the Central Government.
8. Defence Forces
8.1 What should be the considerations for fixing salary in case of Defence personnel and in what manner does the parity with civil services need to be evolved, keeping in view their respective job profiles?
8.1.1. Attractiveness of the Defence Forces is the fundamental aspect which any nation must review periodically to ensure rightful share of young men/women in the society possessed of requisite educational qualifications, technical calibre, physical fitness and psychological aptitude volunteer for a career in the Armed Forces. Any salary package for the Defence Forces Personnel should be based on certain underlying principles which must be consistent with the overriding need to promote attractiveness of service and retentivity of employee, and reflect the fundamental concepts and principles of fairness and equity. Compensation should be so designed to foster and maintain the concept of the profession of arms as a dignified, respected, sought after and honourable career. The emotional and spiritual satisfaction gained from the dedicated uniformed service in itself is not sufficient and it has to be coupled with compensation sufficient enough for an individual member to maintain a standard of living commensurate with his aspirations and responsibilities that directly affect the security of the nation. There could be no Armed Forces sans the spirit of patriotism. At the same time, in peace time, patriotism by itself is not an adequate motivation for a career in the Services. It is opined that, within the broad framework of national comparators, public sector not excluded, the salary structure of services must bear a stamp of equity, both in terms of monetary value and progressive profile.
8.1.2. Historical parities. With regard to the issue of parity with civil servants the following suggestions are made: -
(a) Warrants of Precedence of 1979 read with Warrant of Precedence of 1937 and 1947 should be the cornerstone of protocol and parities which should determine inter-organisational equations for ensuring efficient working environment within the Government frame work especially with regard to Defence Forces where these relativities have eroded.
(b) Within the above relativities, let there be common lower and upper cardinal points of pay fixation for all Class I services, including the IAS.
(c) Based on cadre structure of each service, let there be approximate parity in the minimum assured level of career progression.
(d) There should be a narrowing down of the wide difference in the number of entrants who can hope to reach the top of the scale in various organisations.
(e) If for reasons of pyramidal cadre structure or other reasons, there are wide disparities of growth rate in various services, let there be some compensation for employees who are forced to stagnate for no fault of their own.
(f) The progression in the Defence Forces is symbolised by advancement in rank. Absence of rank pay is a Defence Forces specific anomaly and needs to be introduced for all Select Grade ranks viz. Colonel/Brigadier/All General Officers till the Army Commanders.
8.1.3. The salary structure of Armed Forces Personnel as far as possible should be similar to the salary of comparable civilian employees. The present salary structure of Defence Forces is in disarray due to faulty concept of running pay bands. It has arise due to force-fitting the civilian pay structure on Defence Forces. The deviations warranted by special conditions, which are generally not applicable to the civilians warrant special/different dispensation. The ‘X’ factor is being addressed by Military Service Pay which should however be made credible (increased to offer adequate compensation for tangible/intangible hardships) and linked to the Basic Pay. The disparity that has arises over the years needs to be addressed in the following manner: -
(a) Comparison of Lifetime Earnings. In view of the truncated career and limited promotion avenues, the lifetime earnings of Defence Forces Personnel are much lower than their civilian counterparts. There has also been distinct erosion in historical parities that these personnel enjoyed in comparison with their civilian counterparts. This disparity needs to be bridged by taking either of the following approaches: -
(i) Higher Pay Scales. Defence Forces Personnel need to be compensated by higher pay scales to make up for the loss in lifetime earnings vis-à-vis their civilian counterparts.
(ii) Higher Retirement Benefits. Review of the pension which is presently 50% of the RE may also be considered to address the disparity in lifetime earnings.
(iii) Combination of Pay and Pension. A combined review of pay scales and pension package could also be considered to bridge the gap in lifetime earnings.
(b) Edge. In IV Pay Commission a distinct element of Rank Pay was carved out of the pay scales and awarded to Defence Forces Personnel up to the rank of Brigadier/equivalent thus providing an edge over the civilian Group ‘A’ officers. The Vth Pay Commission also maintained the edge, but however reverted from running pay bands to individual pay scales. The VIth Pay Commission, however, introduced a new concept of Grade Pay and made it applicable to all Central Government services, thus eliminating the edge enjoyed by the Armed Forces in terms of rank pay. A survey of the Armed Forces of prominent armies in the world revealed that they provide an edge to Defence Forces Personnel not only in pay but also in pensions. In India there is no edge enjoyed by the Defence Forces in pay (in fact it is lower than that of civilian counterparts) and the pension is at the same level of 50% (of last pay drawn). Thus there is a strong case for restoring the edge in pay of Defence Forces both in pay and pension.
(c) Compensation for Tangible/Intangible Hardships (‘X’ Factor). It is essential to compensate the soldiers for those aspects of service which are neither situational or location specific nor pertain to skills or expertise. These are factors that are difficult to quantify and are essentially psychological in nature. The twin purposes of such compensation if to firstly convey to the military man that the State and the people appreciate his special role in wars and peace alike and the associated deprivations imposed on him to be ever ready for the purpose, and secondly to generate a sense of pride in him and thereby foster in him the desired fortitude and determination to enable him to unflinchingly lay down his life to uphold the honour and integrity of the Country.
8.1.4. The Armed Forces are as much part of the society as any other occupational group in the country albeit with peculiar conditions of service which are absent elsewhere. In terms of harshness of life, hazardous nature of job, privations, tribulations, acceptance of restrictions on civil liberties under stringent provisions of the Amy/Navy/Air Force Acts, the Armed Forces comprise the riskiest occupational group than any other. Being part of the society demands that its pay and allowances be made equitable with other occupational groups of the Government and thereafter an edge be provided along with compensation for tangible/intangible hardships.
8.2 In what manner should the concessions and facilities, both in cash and kind, be taken into account for determining salary structure in case of Defence Forces personnel.
8.2.1. The concessions available to Defence Forces Personnel are also available to Government Civilian personnel in one form or other e.g. medical facilities (Military Hospitals vs. CGHS), Canteen facilities (CSD vs. Kendriya Bhandar), Travel Concessions Vs LTC, Housing, Electricity and water without special concessions to Defence Forces. The only exclusive benefits are: -
(a) Leave Entitlement. This is to compensate for postings in remote areas (no family accommodation) and even peace stations which are far removed from one’s native place and have limited family accommodation. Thus a soldier has to accomplish all his family, society and human needs within 60 days of annual (earned) leave which a civilian generally accomplishes in all 365 days a year.
(b) Entitled Rations. These are included in the Terms & Conditions of Service of a soldier and have to be provided to meet enhanced calorific needs of a soldier as also the fact that he stays in a barrack with common kitchen for hundreds of his colleagues. It is to e noted that entitled rations are provided at a comparatively meagre scale and are priced very low.
8.2.2. MSP. MSP is an addendum emolument granted to Brigadiers and below only to address those tangible/intangible constraints and disadvantages unique to Military Personnel which affect them for most part of their service career and in their retired lives. MSP is aimed at positively influencing the performance parameters of the Military Men. The MSP is neither synonymous nor an alternative to the existing pay and allowances. It is an independent and a de-novo compensation factor, which was granted by the VIth CPC in addition to the existing and proposed emoluments. The intangible disadvantages have two essential characteristics. Firstly, they are not overtly obvious and consequently have yet to be comprehensively addressed in the Pat structures of the Defence Forces, and secondly, in addition to its adverse impact on the family of a soldier, have a direct and constraining influence on the professional output of soldiers. While relevant in peace stations, the factor assumes more acute characteristics in field and operational situations. Unfortunately, MSP granted to Defence Forces by the VIth CPC is being treated as a panacea for non-resolution of all anomalies which remained unaddressed post VIth CPC. However, despite the grant of MSP, the lifetime earning of Defence Forces personnel remain considerably less vis-à-vis civilian counterparts as the other benefits such as NFU or liberalised terms and conditions of service are not available to the Defence Forces. Therefore, the compensation that MSP is expected to provide for the hardships of service is in reality a mirage. Following have been identified as intangible disadvantage which a Defence Forces Personnel is subjected to: -
(a) The ever present premonition of impending calamity and threat to life.
(b) Truncated careers in conjunction with ‘reduced life cycle pay’ and ‘reduced life.’
(c) Separation from families for prolonged periods which in turn results in acute stress and psychological ailments in the entire family of the soldier.
(d) Transfers and dislocations and its impact on children and spouse.
(e) Bleak career prospects and the resultant constrained service longevity.
(f) Restriction of Fundamental Rights.
(g) Reserve liability after retirement.
(h) Requirement of stringent physical standards and its impact on career security and ensuing stress.
(j) Undefined and unlimited working hours.
(k) Isolation and deprivation.
(l) Long term physical and psychological ailments resulting from service in extreme terrain and climatic conditions and the effects of continuous exposure to hazardous situations.
8.2.3. As far as other benefits in cash are concerned i.e. Allowances, they are either at par with those granted to civilian counterparts, or even lower in many cases. To illustrate, the compensation granted for serving in Counter Insurgency prone areas in the NE and J & K are much lower for the Services than their civilian counterparts. This is because the allowances for Defence Forces Personnel are based on slabs, while the civilian allowances are based on percentage of pay. The most glaring iniquitous compensation is evident in the Instructional Allowance granted at 30% of Basic Pay (tax exempt) to civil officers vis-à-vis Rs 2250 (not tax exempt) granted to the Defence Forces officers.
8.2.4. Thus it can be seen that concessions and facilities available to Defence Forces Personnel should in no way impact the determination of their salary structure which has to be designed based on considerations stipulated in Paras 8.1.1. to 8.1.4 above. Just a couple of concessions available are additional which have been granted in the context of their ‘exclusive nature of job,’ ‘imperatives of ensuring security’ and ‘tangible/intangible hardships.’
8.3 As per the November 2008 orders of the Ministry of Defence, there are a total of 45 types of allowances for Personnel Below Officer Rank and 39 types of allowances for Officers. Does a case exist for rationalization/ streamlining of the current variety of allowances?
8.3.1. Allowances are not a perk or profit. They exist to recompense for circumstances which cannot be addressed in Basic Pay, Additional (or Special) Pay or the ‘X’ Factor (MSP). They focus on the personnel for whom they are properly intended. Allowances conform to one or more of the following aspects: -
(a) Compensation for Financial Disadvantage. The additional cost of discharging responsibilities and duties in response to exigencies of military service.
(b) Reimbursement. For additional expenses that are incurred in the course of duty.
(c) Retention. Some allowances address particular conditions of service which cannot be properly recognised by pay or ‘X’ Factor.
8.3.2. It needs to be understood that there are only six categories of allowances, including five for 22 service-specific allowances. All these allowances are not admissible to all ranks at all times. Within a given category, not more than one allowance is usually admissible to any personnel. These allowances are admissible only to the personnel meeting the specific eligibility conditions of specific allowances for limited periods of applicability. Besides these, 25 allowances are common to both Defence Forces and Central Government Civilian employees. It is also to be noted that there are a total of approximately 32 Civilian specific allowances which are not available to the Armed Forces. While number of allowances for Defence Forces may seem more, they are listed with different nomenclatures owing to the degree of risk or geographical location. For example, Defence Forces Personnel serve in remote areas i.e. High Altitude Allowance/Field Area Allowance/Uncongenial Allowance/SCCIA/Field Area Allowance which are all forms of the Special Duty Allowance (SDA) available to civilian personnel. While the SDA is available as a percentage of pay, the Defence Forces Personnel are paid on a slab basis, which amounts to lower allowances for Defence Forces Personnel for comparatively much harsher, stringent and life threatening working conditions.
8.3.3. To view the concept of allowances to Armed Forces in correct perspective, following considerations are pertinent: -
(a) Though the total number of allowances appear large, the scope is highly limited. All allowances are not admissible to all ranks at all times. Within the total six broad categories of allowances granted to the Armed Forces, not more than one allowance is usually admissible to any personnel at any given time. Most allowances are granted to only the affected cross-section of personnel, and that too for the specific period of applicability, and hence to presume that all listed allowances are granted to all Services personnel concurrently, would be fallacious. The remaining allowances are admissible to sectoral groups of personnel at varying times in their careers.
(b) Whilst each allowance in the Armed Forces is viewed as an individualistic nomenclature, the civilian allowances appear to get broad banded either as special pay or a compensatory allowance. Broad banding of allowances into common nomenclature for Defence Forces results in only six broad categories of allowances as brought out earlier in Para 8.3.2.
(c) The rates of allowances are generally doubles during Pay Commission recommendations, while the pay scales are enhanced by a higher multiple. This progressively reduces the share of allowances as a proportion of pay.
(d) While most allowances granted to civilians are in terms of percentage of Basic Pay, those extended to Armed Forces Personnel are predominantly slab based, much lower comparatively and are not inflation proof. Thus, in absolute terms, Defence Forces Personnel, get lower allowances than their civilian counterparts, when both are posted in same/similar areas.
8.3.4. View Point. The range and scope of allowances, for compensating vastly diverse and peculiar conditions of engagement of Armed Forces personnel should continue. There is an imminent need to link most of these allowances to percentage of salary rather than be slab based. Further, the inter-se ratio between pay structure and allowances should be generally maintained.
8.4 What are the options available for addressing the increasing expenditure on Defence pensions?
8.4.1. With introduction of NPS, all Government employees recruited post 01 Jan 2004 have migrated from the ‘defined benefit’ scheme to the ‘defined contribution’ scheme. Thus the dual pension system of ‘defined benefit’ (pre 01 Jan 2004 entrants) and ‘defined contribution’ (post 01 Jan 2004 entrants) would continue till 2035 by which time all the pre-01 Jan 2004 entrants would have retired. Beyond 2035 only the ‘defined contribution’ system would remain in force. Since the raison d’être of introduction of NPS was to reduce the pension budget it may be said that the pension budget of the Government is considerably reduced. However, expenditure on the matching Government contribution of 10% towards each Government employee for pension still remains.
8.4.2. In view of the foregoing, paying of pensions under the ‘defined benefit’ scheme to Defence Forces Personnel should continue in the light of the fact that historically too, it was only the Armed Forces who were entitled to pension and the obligation of the Government to fulfil its covenant with the Armed Forces.
8.4.3. Notwithstanding the above, some suggested measures to reduce pension expenditure are as under: -
(a) Lateral transfer of Armed Forces personnel to Central/State Governments, Central Armed Police Forces, State Police, Municipal Bodies, PSU etc. This was recommended by VI CPC also.
(b) Downsizing the civil bureaucracy to reduce revenue expenditure.
8.5 As a measure of special recognition, is there a case to review the present benefits provided to war widows?
8.5.1. As a measure of special recognition, war widows are entitled to a variety of benefits by Central/State Government/Armed Forces. However, scope for revision of benefits does exist. This will further repose their faith and help overcome their irreparable loss to some extent. The benefit currently entitled to war widows from Central Government includes Liberalised Family Pension, Ex-Gratia Concessions on Air and Rail Travel, reservation of seats in professional institutes, priority in telephone connections, allotment of oil product agencies under defence quote, educational concessions, Death-cum-retirement Gratuity (DCRG) etc.
8.5.2. The suggested revision of present benefits to war widows should include the following: -
(a) Liberalised Family Pension. It should be exempted from income tax.
(b) Ex-Gratia. The war widows are largely dependent on this award for being able to provide for the cost of living life with dignity. Therefore, it needs to be enhanced to a substantial amount to cater for sharp increase in cost of living. Through this amount the family who has been left bereft of their breadwinner can comfortably discharge the familial responsibilities. The amount should also be exempted from income tax.
(c) Death-cum-Retirement Gratuity. DCRG to the maximum extent should be payable to war widows. There should be no restriction on the maximum payable with respect to the number of years of service put in.
8.5.3. In addition, continuation of certain in-service benefits like Children Education Allowance (CEA)/Hostel Subsidy and Leave Travel Concession which directly impact the welfare of war-widows is recommended. The above mentioned suggestions, if implemented, would greatly serve a noble cause of looking after the welfare of the war-widows whose husbands sacrificed their lives for the nation in the line of duty.
8.6 As a measure of special recognition, is there a case to review the present benefits provided to disabled soldiers, commensurate to the nature of their disability?
8.6.1. Persons with disabilities are required to be given due recognition. Consequent to the enactment of the Persons with Disability Act, 1995, its non-extension to Armed Forces Personnel who are not entitled to disability element in cases where the disability is not attributed to military service, has been highly discriminatory. Recognising this discrimination, the Hon’ble Supreme Court judgment of 29 Apr 14 has upheld a judgment of Armed Forces Tribunal (AFT) Chandigarh bench ruling that soldiers injured while on duly authorised leave are entitled to grant of disability pension. While civil Government servants cannot be compulsorily removed from Government service due to disability, military personnel acquiring disability in cases not attributable to military service are compulsorily thrown out. Hence, there is a need to review the present benefits available to soldiers.
8.6.2. Some of the recommended measures are as under: -
(a) Standard disability element to servicemen on invalidment/retirement in the event of his/her acquiring any amount of disability even in cases where the disability is not attributed to military service.
(b) Higher rate of disability element in cases attributable to military service.
(c) Higher rate of War injury Pension.
(d) While percentage based disability element is being paid to post-2006 retirees, those who retired with disability prior to 2006 are being paid disability element on slab basis unlike civil Government employees. Hence pre-2006 retirees should also be granted disability element on percentage basis.
(e) The pre-2006 PMR cases should also be granted Disability pension as the same not being extended to these retirees.
9.1 Whether the existing allowances need to be retained or rationalized in such a manner as to ensure that salary structure takes care not only of the job profile but the situational factors as well, so that the number of allowances could be at a realistic level?
9.1.1. Need to Rationalise Number of Allowances to Realistic Levels.
(a) Justification & Armed Forces viewpoint on continuing with current range and scope of allowances have been provided in response to Question 8.3 above.
(b) Notwithstanding the above, there does exist a case to review an rationalise the range of allowances and broadband similar allowances into one category, with a view to enhancing administrative efficiency and procedural simplicity. This implies that allowances amongst the three Services which are common in scope but with different nomenclature may be clubbed with no change in applicability provisions.
(c) Following additional suggestions are made: -
(i) In order to provide meaningful compensation vide the allowances and for the remunerations to remain relevant, it is imperative that the allowances be reviewed with increase in inflation. Following options may ne considered: -
(aa) Option I. Every time DA is increased by a particular percentage, the allowances should also be increased by the same percentage.
(ab) Option II. Allowances be enhanced by 50% every time the DA rates increase by 50%.
(ii) To reduce establishment expenditure and to promote efficiency in the administration, there is a need to simplify the procedure of payment of various allowances. The cost of such administrative procedures is likely to outweigh the actual amount of allowance and hence bulk of the allowances need to be paid automatically.
(iii) There are certain emoluments linked to DA (e.g. Classification Allowance), which need to be replaced with grant of additional increments in the applicable pay band.
(iv) There is a large number of allowances admissible to government employees which certainly needs to be rationalised. However the significance of the allowances as a compensation/motivation is diminishing over time. This is due to the fact that total emoluments component attributed to allowances is reducing compared to pay because while pay is generally improved by a factor of three, allowances are just doubled. For example, an allowance of Rs 100 was admissible to an employee drawing Basic Pay of Rs 1000, after two pay commissions the basic pay would reach Rs 9000 while the allowance would remain at Rs 400. The allowance thus reduces from 10% to about 4.5% of basic pay after two pay commissions. There is a need to give similar enhancements in pay and allowances.
9.2 What should be the principles to determine payment of House Rent Allowance?
9.2.1. The HRA is authorised as a percentage of basic pay for all employees. The enhancement of HRA is 3% per year which is the same as the annual increment. Since inflation always outpaces the annual increment, it becomes increasingly difficult to balance actual rent with HRA. As DA is a good and accepted norm of measuring inflation for employees and it will be appropriate if the HRA is paid as a percentage of Basic Pay + Dearness Allowance.
9.2.2. Principles for Payment of House Rent Allowance (HRA).
(a) The rates of HRA should correlate to the existing market rates of rent. It should satisfy the principle of “Adequacy and Sufficiency.”
(b) The classification of cities and towns for the purpose of HRA should factor the contemporary demographic migration trends, and rates stipulated accordingly.
(c) The structure of HRA (slab based or percentage based) should be arrived at after due sensitivity analysis is conducted of the gap between existing market rate rents and HRA rates.
(d) Defence Forces Personnel should be entitled to select ‘Anchor Stations’ besides the Selected Place of Residence (SPR) for the purpose of claiming HRA on account of children education while the children are in Classes IX to XII. This is an urgent requirement as Defence Forces Personnel are mostly posted in small towns/cities where quality education facilities do not exist. The individual is either forced to shift his family to his place of posting and put his children at a disadvantage or keep his family in his SPR with no HRA admissible to him. Concept of Anchor Stations with admissibility of HRA in Anchor Stations will resolve this problem.
(e) Rates of HRA should be adequate to enable hiring of accommodations as per status in a given city or place of duty.
(f) HRA should be made inflation proof and fully exempt from
10.1 The retirement benefits of all Central Government employees appointed on or after 1.1.2004 a re covered by the New Pension Scheme (NPS). What has been the experience of the NPS in the last decade?
10.1. No comments offered as NPS is not applicable to Armed Forces personnel.
10.2 As far as pre-1.1.2004 appointees are concerned, what should be the principles that govern the structure of pension and other retirement benefits?
10.2.1. The principles that govern the structure of pension and other retirement benefits for pre-1.1.2004 appointees should conform to the extant pension rules.
11. Strengthening the public governance system
11.1 The 6th CPC recommended upgrading the skills of the Group D employees and placing them in Group C over a period of time. What has been the experience in this regard?
11.1.1. Not applicable to Armed Forces
11.2 In what way can Central Government organizations functioning be improved to make them more efficient, accountable and responsible? Please give specific suggestions with respect to:
a) Rationalisation of staff strength and more productive deployment of available staff;
b) Rationalisation of processes and reduction of paper work; and c) Economy in expenditure.
11.2.1. Not applicable to Armed Forces.
12. Training/ building competence
12.1 How would you interpret the concept of “competency based framework”?
12.1.1. The provisions for undergoing career enhancement courses abroad as applicable to Civil Services officers should be extended to Armed Forces too, in addition to basic/specified professional course currently being conducted within the Services.
12.2 One of the terms of reference suggests that the Commission recommend appropriate training and capacity building through a competency based framework.
a) Is the present level of training at various stages of a person's career considered adequate? Are there gaps that need to be filled, and if so, where?
b) Should it be made compulsory that each civil service officer should in his career span acquire a professional qualification? If so, can the nature of the study, time intervals and the Institution(s) whose qualification are acceptable, all be stipulated?
c) What other indicators can best measure training and capacity building for personnel in your organization? Please suggest ways through which capacity building can be further strengthened?
12.2.1. Not applicable to Armed Forces.
13.1 What has been the experience of outsourcing at various levels of Government and is there a case for streamlining it?
13.1.1. Not applicable to Armed Forces.
13.2 Is there a clear identification of jobs that can be outsourced?
13.2.1. Not applicable to Armed Forces
14. Regulatory Bodies
14.1 Kindly list out the Regulators set up under Acts of Parliament, related to your Ministry/ Department. The total number of personnel on rolls (Chairperson and members + support personnel) may be indicated.
14.1.1. Not applicable to Armed Forces
14.2 Regulators that may not qualify in terms of being set up under Acts of Parliament but perform regulatory functions may also be listed. The scale of pay for Chairperson /Members and other personnel of such bodies may be indicated.
14.2.1. Not applicable to Armed Forces
14.3 Across the Government there are a host of Regulatory bodies set up for various purposes. What are your suggestions regarding emoluments structure for Regulatory bodies?
14.3.1. Not applicable to Armed Forces.
15. Payment of Bonus
One of the terms of reference of the 7th Pay Commission is to examine the existing schemes of payment of bonus. What are your suggestions and observations in this regard?
15.1. The system of grant of bonus should continue as hitherto fore and provisions applicable to Civil Services should equally apply to Defence Forces.
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C/7026/VIIth CPC/Vol-I 12 Jun 2014
ADJUTANT GENERAL’S BRANCH
[Tri Services Pay Staff (TRIPAS]
TERMS OF REFERENCE 7TH CPC
REVIEW OF EXISTING ALLOWANCES PAID TO DEFENCE PERSONNEL
1. Refer to MoD ID No. 1(3)2014/D (Pay/Services) dated 03 Jun 2014.
2. The para-wise replies to observations made as per above quoted note are appended below: -
(a) The Armed Forces Rank structure is spread over three Groups i.e. Officers (Gazetted Class I), JCOs (Gazetted Class II) and Other Ranks (ORs). Hence, for ease of understanding, allowances extended to these three Groups have been shown separately. It is pertinent to bring out that there are many allowances which are applicable only to a single category/group i.e. Kit Maintenance Allowance (KMA), Qualification Pay, Hospitality Allowance etc are applicable to Officers, whereas Classification Allowance, Airworthiness certificate Allowance etc are applicable only to JCOs/ORs. Also, mutually exclusive allowances out of which only one allowance can be drawn at a time with same rates have been placed together i.e. Officer getting Flying Allowance in Navy will not get Submarine allowance concurrently.
(b) The list of allowances has been scrutinised to ensure that no allowance has been missed out. Diving/Diving Attendance allowances have now been listed at S No. 32. Updated list of allowances is annexed.
(c) The data in respect of Flight Charges Allowance has been re-checked & found correct (Rs 400 p.m. for JCOs and Rs 250 p.m. for ORs). However, rates in respect of Hospitality Grant admissible to Cos of Col & eq/Lt Col & eq rank had been inadvertently missed out and updated list is now annexed.
(d) As brought out in para 2 (a) above, tables of three categories have been made for ease of understanding only.
(e) Data regarding Columns 11 to 14 are under compilation. The process is likely to take some time and hence it has been scheduled to be submitted alongwith JSM. However, if ready, it shall be submitted earlier.
(f) CPC has sought information only in respect of allowances in cash or kind and examples given vide MoD letter under reference do not fall under the said category.
3. Further, it is also clarified that no other allowances other than those mentioned in the annexed list are admissible to Defence Personnel.
4. For information and further necessary action.
(V S Chauhan)
Encls: as stated above
MOD – D (Pay/Services), Sena Bhawan, New Delhi – 11
Copy to: -
APCC Room No. 1, Sena Bhawan, New Delhi – 11
7th CPC (Navy), A Block Hutments
AFPCC, Air HQ (RK Puram), West Block VI, New Delhi – 66.
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Please note the Annex referred to above (table of allowances) has not been included in the hope that updated tables, including Columns 11 to 14, would be in the JSM, when received.