The Hindu Business Line : Pay panel report: Net outgo at Rs 7,975 cr/year

New Delhi, March 24 Pay packages of Central Government employees are in for a makeover. The new pay structure devised by the Sixth Pay Commission, headed by Mr Justice B.N. Srikrishna, aims to provide an additional Rs 12,561 crore per year in the hands of the Central Government employees and armed forces personnel. But with some “savings” on account of specific recommendations of the commission, the Government’s net outgo is expected to be Rs 7,975 crore annually.

The revised pay packages are expected to retain the best in service as well as draw talent from outside the pool as part of the administrative reforms.

The Rs 12,561-crore additional expenditure arising from the Commission’s recommendations are under different heads, including revised pay scales for civilians as well as defence forces, house rent allowance, pensions and other allowances.

Rs 18,000-crore arrears

However, with the revised pay structures suggested to take effect from January 1, 2006, the Government will also have to bear one-time expenditure of about Rs 18,060 crore towards payment of arrears, which could be done in two installments over two fiscal years. Also, the projected savings will not materialise in the first year of implementation, expected to be 2008-09 fiscal.

“I have recommended something that is good for the nation…Average 40 per cent increase has been recommended (considering all allowances) from the level of last pay commission,” Mr Justice Srikrishna said after submitting the report to the Union Finance Minister, Mr P Chidambaram, here at North Block today.

Minimum/maximum pay

The Sixth Pay Commission has pegged the minimum salary at the entry level to be Rs 6,660. The maximum salary at the level of Secretary/equivalent is to be Rs 80,000, the minimum-maximum ratio working out to 1:12. The Cabinet Secretary would be placed in a separate category and paid a fixed revised salary of Rs 90,000 a month.

The Sixth Pay Commission has also mooted Performance Related Incentive Scheme (PRIS) in Government under which employees would be eligible for pecuniary remuneration over and above the pay. The PRIS is expected to bridge the gap between the government and private sector pay to some extent, the report has said. PRIS is to replace ad-hoc bonus scheme immediately and eventually replace productivity-linked bonus. PRIS is to be budget neutral.

Pensions rise

The commission has also recommended a 40 per cent increase in pension/family pension, resulting in an annual additional expenditure of Rs 1,365 crore (covers pensioners of defence forces as well).

Increased payments of gratuity on account of increase in pay scales and proposed increase in gratuity limits would result in additional annual expenditure of Rs 410 crore. A new concept, Military service pay, to attract personnel for defence forces has been mooted, which would cost Rs 1,996 crore.

Pay bands

For Central Government employees, a major departure from the earlier pay commissions has been made in respect of their pay scales. For the first time, to remove stagnation, the Commission is recommending running pay bands for civilian as well as for defence forces. Since individual pay scales have a limited span, often leading to stagnation, running pay bands have been recommended to remove many of the pay scale-related anomalies.

Pension is to be paid at 50 per cent of the average emoluments / last pay drawn (whichever is more beneficial) without linking it to 33 years of qualifying service for grant of full pension. A liberal severance package has also been recommended for employees leaving service having put in 15 to 20 years of service. Also, revision of commutation table for pension has been suggested.

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