GroundReport | India | Windfall for Babu’s as Govt. approves 6th PC Report

Windfall for Babu’s as Govt. approves 6th PC Report

by Jagan T August 14, 2008

As the country is all set to celebrate Independence Day, there's very good news for bureaucrats and military personnel. A pay hike over and above what was suggested in April has been cleared by the Union Cabinet.Highlights of the Cabinet decision includes:

1. A 20 % raise over the pay bands suggested by the Commission The minimum basic pay will now be Rs 7000 and the lowest emolument of government employee more than Rs 10,000.
2. Uniform 3% raise in basic pay every year. The norm is a Rs 500-increase annually within grade scale. The current norm is a Rs 500-increase in the basic pay annually within the grade scale.

3. The actual pay-out would come in November.

4. New wages to be effective from January 2006.

5. No Cabinet Secretary rank for Intelligence Bureau chief, the three Service chiefs or the Chairman, Railway Board

6. Group D personnel to stay (peons in ministries and porters in Railways)

Military service pay for persons below the officer rank (POBR) would be Rs 2,000 per month

7. Significant hike in salaries of Brigadiers: they move to Pay Band 4 (Rs 39,200-67,000) from the suggested Pay Band 3 (Rs 15,600-39,100)

8. DIG-scale abolished in IPS and Indian Forest Service.

9. Removal of Campus restriction for grant of Transport allowance.

The new pay package for the 55 lakh Central government employees, to be announced on August 15, proposes a 20 per cent raise over the pay bands suggested by the Commission. The panel in May suggested a gross 40 per cent hike, which means an effective 25 per cent after taxes. Thus, a wage hike higher than those recommended by the Sixth Pay Commission, marginal increase in annual increments and the payment of arrears in cash are some of the sweeteners incorporated in the proposal for Thursday's Cabinet meeting after Prime Minister Manmohan Singh’s intervention.

This raise takes into account the Commission’s miscalculation of the dearness allowance - absorbed in the new basic pay—as 74 per cent whereas it should have been 83 per cent, sources said. The proposed annual increment in the basic pay would also be a tad higher than the 2.5 per cent suggested by the Commission.

The PM has suggested that the new wage be effective from January 2006. He has ensured that the new pay would be effective from January 2006, as recommended by the Commission, with 40 per cent of the arrears paid in the current fiscal and the remaining 60 per cent next year.

The actual pay-out would come in November after the monsoon session of Parliament in September passes the Finance Ministry’s supplementary Demand For Grant to fund the wage bill, said sources.

There would also be no scrapping of Group D personnel (peons in ministries and coolies in Indian Railways). The Commission had suggested that these posts be subsumed in Group C of clerks, fresh induction be stopped and jobs be outsourced.

As for the armed forces, the good news is that military service pay for persons below the officer rank (POBR) would be Rs 2,000 per month. The forces had demanded Rs 3,000 as against Rs 1,000 introduced by the commission.

There would also be a significant improvement in the salaries of Brigadiers as the government has agreed to put them in Pay Band 4 (Rs 39,200-67,000) as against the suggested pay band 3 (Rs 15,600 - 39,100). For the Indian Police Service and Indian Forest Service, relief would come in the form of abolition of the Deputy Inspector General scale. There would also be no discrimination between Group B and Group A service officers in the form of a differential basic pay at the time of joining, as suggested by the Commission. They would both start at the same scale, as is prevalent now, said sources.

The pay panel, known as the Sixth Pay Commission, made its recommendations earlier this year for salary increases for central government workers costing 125.61 billion rupees ($2.9 billion) for the fiscal year 2008/09, plus 180.60 billion rupees in backpay to January 2006.

The cabinet set up a team of top civil servants to examine the recommendations and newspapers and officials said proposals were likely to go before the cabinet on Thursday, although some said they may not be announced until the prime minister makes a speech on the Independence Day national holiday on Friday.

The pay round comes roughly once a decade and the previous one in 1997 raised salaries for federal employees by nearly 40 percent, prompting many state governments to follow suit and blowing the combined state and federal deficit to nearly 10 percent of GDP.