Seventh CPC Approach for simplification and rationalisation

The Seventh CPC like other Pay Commissions had been entrusted with the responsibility of evolving pay structures which were rational and simple.It was expected that the pay packages offered should be able to attract best talent in civil and defence services and also be capable of ensuring  performance related efficiency while taking note of  the existing socio political setup in the country.The pay structure should ensure value addition to services by talent of individual employees.

While discussing the pay structure for civilian employees the report explains the evolution of compression ratio to present level.Compression ratio is the ratio between the lowest pay  and the highest salary drawn by Secretary to Govt. of India in the pay structure.At the time of first CPC the ratio was 1:36.4(min Salary of ₹ 55 against highest of ₹ 2000.) .This came down to 1:11.4 in sixth CPC (min Salary of ₹ 7000 against highest of ₹ 80000).

There were several innovations brought about by  VI CPC which included running pay bands for both Civilians as well as Defence forces as well as  the introduction of the concept of Grade Pay as a level differentiator besides  calculation of the annual increment on percentage basis.Sixth CPC had also recommended abolition of Gr.D category posts by elevation of present incumbents to Gr.C by skill upgradation.It reduced 35 pay scales of Vth CPC to 23 (19 Pay bands +4 fixed pay levels).

However the Seventh CPC was confronted by stakeholders with several inconsistencies in Pay bands and Grade Pay structures and anomalies in Entry pay  recommended by Sixth CPC at various level . This  scenario had lead to demand for a fitment factor which may cover all cases in equitable fashion.

The recommendations of Seventh CPC are for abolishing the system of Pay Bands and Grade Pay and creation of  new functional levels  by merging the grade pay with the pay in the pay band. Commission said that it has ensured that all of the existing levels have been subsumed in the new structure; and no new level has been introduced nor has any existing level been dispensed with.The Seventh CPC has recommended a Pay matrix with distinct Pay Levels. The Level would henceforth be the status determiner as per table given below:

The Commission  has pointed out that  with this methodology of pay fixation “..any new entrant to a service would wish to be able to make a reasonable and informed assessment of how his/her career path would traverse and how the emoluments will progress alongside. The new pay structure has been devised in the form of a pay matrix to provide complete transparency regarding pay progression.”

In addition to the pay matrix the CPC has also applied concept ofrationalisation of entry pay to take care of uneven pattern of  a jumps in the career hierarchy under existing pay scales in the Government of India. This system is based on the premise that with enhancement of levels from Pay Band 1 to 2, 2 to 3 and onwards, the role, responsibility and accountability increases at each step in the hierarchy.

The  pay matrix as suggested by CPC is intended to  replace  existing system of Pay Bands and Grade Pay.The pay matrix comprises of two dimensions. ” It has a “horizontal range” in which each level corresponds to a ‘functional role in the hierarchy’ and has been assigned the numbers 1, 2, and 3 and so on till 18. The “vertical range” for each level denotes ‘pay progression’ within that level. These indicate the steps of annual financial progression of three percent within each level.”

The Commission has devised the pay matrix by calculating the sum of Basic pay and Grade Pay at various stages and multiplying the sames of  by a multiplication factor of 2.57 . While devising the pay matrix the entry pay has been calculated by adopting different multiplication factors (shown as index in table below) for different pay bands depending on respective functional responsibilities.Pay Matrix is given below.

The following methodology has been suggested for fitment:

“The fitment of each employee in the new pay matrix is proposed to be done by multiplying his/her basic pay on the date of implementation by a factor of 2.57. The figure so arrived at is to be located in the new pay matrix, in the level that corresponds to the employee’s grade pay on the date of implementation, except in cases where the Commission has recommended a change in the existing grade pay. If the identical figure is not available in the given level, the next higher figure closest to it would be the new pay of the concerned employee. “

The CPC report has given some working examples for calculation.Having had a brief insight into Civilian Pay Scales we shall take up Army Pay Scales shortly.

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Seventh CPC Report -just arrived!

Hurrah ! The wait is over for all Govt employees . For those who are directly affected as well as those who would reap benefits of the fall out. Whether it's time for setting up crackers or for waiting till VIIIth Central Pay Commission (CPC)  will be known in coming days.Unlike previous occasions the CPC has ben considerate to the extent of submitting the report on time leaving enough time for Govt to deliberate and accept or reject various recommendations.

The initial signals are that of modest gains except for a few who were persistent about catching up with Indian Administrative Services and creating a level playing field. The Pay Commission has ultimately got convinced to extend the edge enjoyed by IAS in matter of pay fixation at various stages of career to IPS and IFoS.Following are some of the highlights.

The CPC while deciding about pay scales and procedure for fitment has come up with innovative concept of Pay Matrix whereby the lateral spread in the matrix would denote the panorama of job functions and related pay packages . The vertical movement would cover the  pay hikes.The system of Pay Bands and Grade pays introduced by the previous CPC has thus been laid to rest.The  CPC had been confronted with several anomalies by the representationists which prompted the change. Pay matrices have been drawn up for civilians, defence personnel and for military nursing service.

For the Civilian Employees the minimum pay starts from Rs.18000/- (corresponding to existing lowest pay of Rs.7000/-)and with the suggested annual increment rates of 3% the highest salary is pegged to Rs.2.25 Lakhs.A progressive suggestion is for dispensing with the differential pay system between direct recruits and those occupying a post by internal promotion.The strategy for pay fixation has been further simplified with introducing fitment factor of 2.57 which should expectedly take care of pay fixation anomalies which crop up whenever the matter of revision of pay scales comes up.This fitment factor of 2.57 is being proposed to be applied uniformly for all employees.

 A similar Pay Matrix for defence personnel starts from Grade Pay of Rs. 2000/- which covers salary of sepoys and equivalents.A somewhat similar system has been conceived for Military Nursing Services.The aspect of performance monitoring and periodic promotions will continue through Modified Assured Career Progression Scheme  as per past intervals of 10/20/30 years with the changed  promotion criteria being benchmarked at" very good". For military personnel the review is pegged to 8/6/14 years.

All ranks of the Defence forces upto Brigadier and equivalent ranks will continue to be entitled to payment of Military Service Pay (MSP)which is given in recognition of job related challenges and consequential difficulties.MSP would be counted for calculation of DA and Pension but not for House Rent Allowances (HRA) and Annual Increment.For defence personnel the Commission has also recommended rationalisation of compensation to Army Personnel for death or injury under various eventualities.

For  Short Service Commissioned Officers the good news is is that they may be permitted to exit Armed Forces any time between 7 and 10 years of service with a terminal gratuity equivalent of 10.5 months of reckon able emoluments. along with recommendation for a fully funded one year Executive Programme or a M.Tech. programme at a premier Institute.

The Commission has made drastic recommendation in respect of allowances admissible to Employees "with the overall aim of transparency, simplification and nationalization".The Commission has highlighted the  difficulties related to staff housing and revised the upper limits  for housing loans besides liberalising the process and permitting separate loans to spouses who are in Govt. job. Requisition of private house for Govt. Employees has been recommended wherever the available staff quarters are not sufficient to meet the demand.

The Commission has proposed enhancement in the ceiling of gratuity payable at the time of retirement from the existing ₹10 lakh to ₹20 lakh from 01.01.2016.adding that the ceiling on gratuity may increase by 25 percent whenever DA rises by 50 percent.

Another area covered extensively is that of periodic Cadre Review.The Commission has recommended  that proposals of this nature be examined by Departments initially coopting DoPT and Department of Expenditure under concerned Secretary of the Department.Only after this basic scrutiny the matter can go to Cabinet Secretary in deserving cases.

Most of the allowances that have been retained have  been given a raise that is commensurate with the rise in DA. Allowances that are in the nature of a fixed amount but fully indexed to DA have not been given any raise. Regarding percentage based allowances, it has been stated that since the Basic Pay will rise as a result of the recommendations of the Commission.

For House Rent Allowance the Commission has recommended rationalisations to 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively. A formula has also been suggested for upward hike in HRA pattern as Cost of living index crosse 50% and 100%.Currently, in the case of those drawing either NPA or MSP or both, the amounts of NPA/MSP are included with the Basic Pay and HRA is being paid as a percentage of the total amount. The Commission has recommended that  HRA should be calculated as a percentage of Basic Pay only and that add-ons like NPA, MSP, etc. should not be included while working out HRA.

Amongst the allowances suggested for abolition are Night Duty allowances and Motor Car /Motor Cycle purchase advances. .

The Pay Commission has made several suggestions for improving  Health Coverage for Employees .These suggestions  include Scheme for Health Insurance,and suggestion for extending list  of hospitals from private sector in those areas where coverage is low.The Rates of contribution for Health Insurance are proposed to be increased upto Rs.1500/2500/5000.The higher rates for contribution would result in insurance covers extending to Rs.15/25/50 Lakhs.

For the Pensioners  the Commission has sought to make complete parity of past pensioners with current retirees.Under the recommendations  the pension of  personnel who retired prior to 01.01.2016 (expected date of implementation of the Seventh CPC recommendations) shall first be fixed in the Pay Matrix being recommended by this Commission, on the basis of the Pay Band and Grade Pay at which they retired, at the minimum of the corresponding level in the matrix. This amount shall be raised, to arrive at the notional pay of the retiree, by adding the number of increments he/she had earned in that level while in service, at the rate of three percent. Fifty percent of the total amount so arrived at shall be the revised pension. In the case of the Defence personnel, total amount so arrived at shall be inclusive of MSP.Another  calculation is to be carried by  multiplying the pension fixed under sixth  CPC  by 2.57 to arrive at an alternate value for the revised pension.Pensioners will be given the option of choosing whichever formulation is beneficial for acceptance.

This was what I could grab in the first reading of CPC report.Will be coming up with subject wise write ups in ensuing articles.