7th CPC Allowance Committee Report Submitted to the Government or not?

Was the 7th CPC Allowance Committee Report submitted to the government as early as February 22?

A high-level committee, under the chairmanship of Finance Secretary Ashok Lavasa was constituted by the Central Government to review the Seventh Pay Commission’s recommendations regarding the allowances being given to the Central Government employees. According to information, the committee had already submitted its report on February 22.

Irrespective of who possesses the report now – the committee or the government – what is more intriguing is the recommendations that it contains.

One could see that the 7th Pay Commission suggested either rationalization or simplification at many places. An example is the Pay Matrix Table, which has now brought the entire Pay Structure of more than 35 lakh employees under one Table. Although there are some anomalies, the system has dramatically simplified the process of annual increment calculation and also pay fixation on Promotion or MACP.

At present 196 different kinds of allowances are being given to the Central Government employees. Some modifications have been recommended in these too as part of the rationalization and simplification drive. The Seventh Pay Commission has recommended the abolition of 52 allowances. And another 36 allowances have been abolished as separate identities, but subsumed either in an existing allowance or in newly proposed allowances.

The Commission said that the entire range of allowances is administered in broadly four ways. Fully DA indexed Allowances, Partially or Semi DA indexed Allowances, No DA indexation Allowances and Percentage based Allowances. House Rent Allowance is being under the category of Percentage based Allowances. The Commission also said that the compensation towards the housing needs of Central Government employees is covered in many ways. The Commission finally suggested that the percentage based allowances by a factor of 0.8, the Commission recommends that HRA should be rationalized to 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively.

The big irritation, or rather disappointment to the Central Government employees was the recommendation to reduce the percentage of House Rent Allowance (HRA).

All trade unions have expressed their harsh opposition to the proposed cuts in HRA. The Central Government employees’ Federations also expressed their disappointment through various protest. Finally the Central Government accepted to constitute a high level committee to examine the recommendations of 7th Pay Commission regarding Allowances.

Now, sources claim that the committee has already submitted its report to the government.

The government can announce its final decision on the recommendations of the committee any day. But, many believe that there could be a delay in the announcements due to the state elections that are being held in various parts of the country and the election commission’s guidelines that are being enforced now.

Unconfirmed reports say that the committee has recommended the percentage rates of HRA as per 6th CPC and changes in the method of calculating Transport Allowances also.

The biggest mystery however is – will these recommendations be given retrospective effect and will arrears be given?

Three dates are currently being suggested – January 1, 2016; August 1, 2016; and April 1, 2017.

Only the Central Government has all the answers right now.

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Grant of advances: Seventh Pay Commission recommendations: Amendment to Rules of Compendium of Rules on Advances to Government Servants.

No.12(1)/E.II(A)/2016
Government of India
Ministry of Finance
Department of Expenditure

New Delhi, 7th October, 2016

OFFICE MEMORANDUM

Subject: Grant of advances: Seventh Pay Commission recommendations: Amendment to Rules of Compendium of Rules on Advances to Government Servants.

The undersigned is directed to say that in pursuance of the decision taken by the Government on the Seventh Pay Commission’s recommendations relating to advances, all the interest free advances stand discontinued as per attached annexure, with the exception that the interest free Advances for Medical Treatment, Travelling Allowance for family of deceased, Travelling Allowance on tour or transfer and Leave Travel Concession shall be retained.

2. In addition, the advance for training in Hindi through Correspondence Course, which is not mentioned in the Compendium of Rules on Advances to Government Servants, also stands abolished in pursuance of the decision of Government on 7th CPC recommendations.

3. These orders will take effect from the date of issue of this O.M. The cases where the advances have already been sanctioned need not be reopened.

4. In so far as persons serving in Indian Audit and Accounts Department are concerned, these orders issue in consultation with the Comptroller and Auditor General of India.

5. All Ministries/Departments are requested to bring the amendments to the notice of all its attached and subordinate offices for their information.

Hindi version of this O.M. is enclosed.

sd/-
(Pankaj Hazarika)
Director, E.II(A)

AMENDMENTS TO COMPENDIUM OF RULES ON ADVANCES TO GOVERNMENT SERVANTS, 2005

S.No. / Name of Advance / GoI Decision on 7th CPC recommendations
1. Bicycle Advance – Abolished
2. Warm Clothing Advance – Abolished
3. Advance of Pay on Transfer – Abolished
4. Festival Advance – Abolished
5. Natural Calamity Advance – Abolished
6. Advance of Leave Salary – Abolished
7. Advance for Law Suits – Abolished

Authority: www.finmin.nic.in

Click to view the order

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No.11/2/2016-JCA
Government of India
Ministry of Personnel, Public Grievances and pensions
Department of Personnel & Training
JCA Section

*************

North Block, New Delhi
Dated the 16th August, 2016

OFFICE MEMORANDUM

Subject: Setting up of Anomaly Committee to settle the Anomalies arising out of the implementation of the Seventh Pay Commission’s recommendations.

The undersigned is directed to say that it has been decided that Anomaly
Committees should be set up, consisting of representatives of the Officials Side and
the Staff Side to settle the anomalies arising out of the implementation of the 7th Pay Commission’s recommendations, subject to the following conditions, namely:

(1) Definition of Anomaly

Anomaly will include the following cases:

(a) where the Official Side and the Staff Side are of the opinion that any
recommendation is in contravention of the principle or the policy enunciated by the Seventh Central Pay Commission itself without the Commission assigning any
reason; and

(b) where the maximum of the Level in the Pay Matrix corresponding to the applicable Grade Pay in the Pay Band under the pre-revised structure, as notified vide CCS (RP) Rules 2016, is less than the amount an employee is entitled to be fixed at, as per the formula for fixation of pay contained in the said Rules”.

(2) Composition:
There will be two levels of Anomaly Committees, National and Departmental,
consisting of representatives of the Official Side and the Staff Side of the National Council and the Departmental Council respectively.

(3) The Departmental Anomaly Committee may be chaired by the Additional Secretary (Admn.) or the Joint Secretary (Admn.), if there is no post of Additional Secretary (Admn.). Financial Adviser of the Ministry / Department shall be one of the Member of the Departmental Anomaly Committee.

(4) The National Anomaly Committee will deal with anomalies common to two or more Departments and in respect of common categories of employees. The Departmental Anomaly Committee will deal with anomalies pertaining exclusively to the Department concerned and having no repercussions on the employees of another Ministry / Department in the opinion of the Financial Adviser.

(5) The Anomaly Committee shall receive anomalies through Secretary, Staff Side of respective Council upto six months from the date of its constitution and it will finally dispose of all the anomalies within a period of one year from the date of its  constitution. Any recommendations of the Anomaly Committee to resolve the anomaly shall be subject to the approval of the Government.

(6) Cases where there is a dispute about the definition of “anomaly” and those where there is a disagreement between the Staff Side and the Official Side on the anomaly will be referred to and “Arbitrator” to be appointed out of a panel of names proposed by the two sides. However, this arbitration will not be a part of the JCM Scheme.

(7) The Arbitrator so appointed shall consider the disputed cases arising in the Anomaly Committees at the National as well as Department level.

(8) Orders regarding appointment of the Arbitrator and constitution of Anomaly Committee at National Level will be issued separately.
All Ministries / Departments are accordingly requested to take urgent action to
set up the Anomaly Committees for settlement of anomalies arising out of
implementation of the 7th Pay Commission’s recommendations, as stipulated above.

(G. Srinivasan)
Deputy Secretary (JCA)

DoPT order

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The article ‘A miserable 2 per cent‘ written by Shri. Vinod Rai, former comptroller and auditor general, and presently the chairman of Banks Board Bureau appeared in The Week magazine (24th July edition).

In the article, Shri. Vinod Rai clears up the myth of the supposedly ‘hefty’ pay hikes that the government ‘babus’ would receive on account of the 7th Pay Commission recommendations.

A miserable 2 per cent

On June 30, headlines across newspapers were on the Union government having approved the Seventh Pay Commission recommendations. The Economic Times headline read, “Central staff hit pay dirt: An early Diwali”. The newspaper said the government had accepted the recommendations doling out ‘hefty’ pay hikes. The salaries were expected to increase in the range of 14 percent to 23 per cent. The bold fonts also announced that the lowest salary was to increase from Rs.7,000 per month to Rs.18,000. The highest salary, received by the cabinet secretary, was to go up to Rs.2,50,000 from Rs.90,000.

Sounds huge, does it not? But we need to analyse this. What is the bonanza and what are the hefty pay hikes which are speculated to be “fuelling inflationary pressures”?

Actually, the salary of Rs.7,000 and Rs.18,000 are not comparable. The equivalent of the Rs.7,000 basic salary. which was fixed 10 years ago and currently applicable with the dearness allowance added on, is Rs.15,750 (Rs.7,000 basic plus 125 per cent DA). In the salary of Rs.18,000 now announced, the DA is subsumed. Thus, a more accurate comparison would be the present salary of Rs.15,750 and the new salary of Rs.18,000. Similarly, the cabinet secretary at present receives Rs. 2,02,500. The newspapers also announced that the total outgo as a consequence of the hike was expected to be Rs.1 lakh crore.

The comments on social media are more expressive! They question whether government employees actually deserve higher salaries: “Being paid more for what?”, “More pay for less and less work”, and “Babus don’t deserve a hike.” In fact, it is speculated that these increases will fuel inflation. Another school of thought believes that it will kickstart spending, thus generate demand and hence increased economic activity.

The Pay Commission is announced once in ten years. Thus any increase in basic salary comes about once in ten years. Even if we were to assume that this Pay Commission has brought about a hike of 20 percent, it would tantamount to a simple rate of2 per cent per annum. Which employee in the private sector would be content with a 2 per cent per annum hike? A couple of years ago, I was pleasantly surprised to hear of the bonus received by one of the youngsters in the family. I found that his annual bonus alone was more than the sum of the total salary earned by me over my entire career! He could afford at least two vacations abroad for himself and his kids every year, travelling business class. My wife and I have never been on any vacation as yet. At most, every year we visited our parents using up my earned leave or she would accompany me if I travelled on work. For him the weekend is a total break from work—he gets no official calls over the weekend. Mine was a 24×7 job when I could not refuse anyone who called me. Once when my wife reminded the caller that he had called on a holiday, he had the gumption to remind her that official phones were given to government functionaries so that they could be contacted all the time!

There is then the fear that the pay increase will cause financial difficulties to state governments. True, it will. However, prudent financial management requires constant mobilisation of resources. However, considering the fact that we have just about an election every year, to local bodies or state legislatures or the general election, very few governments can take appropriate measures to increase taxes or tap methods to raise resources. If you cannot take harsh decisions to raise resources, why blame government employees who get a paltry increase of2 per cent per annum? I acknowledge that government employees are not the most popular guys. To a large extent, we are to blame for this. This perception needs to be addressed and only we can do that with our own endeavours and actions. However, if the general public still continues to grudge the paltry increase, they must realise that if you pay peanuts you get only…. !

Former comptroller and auditor general, Rai is chairman of Banks Board Bureau.

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7th Pay Commission – Armed Forces unhappy – We are still awaiting finer details to come out but on the look of it there are “not bright spots” as of now, defence sources said.

The armed forces are unhappy with the cabinet approval of the Seventh Pay Commission recommendations saying the anomalies that they had highlighted has not been taken care of.

Defence minister Manohar Parrikar admitted that “some” of the recommendations that he had strongly pushed on behalf of the armed forces have “not” been accepted.

We are still awaiting finer details to come out but on the look of it there are “not bright spots” as of now, defence sources said.

They said that the fact that the government has set up a committee to look into anomalies arising out of implementation of the Commission’s report is itself an indicator that their concerns have not been taken into account.

Sources said the demand for uniform pay matrix has not been taken into account and that the allowances have not been brought at par with civilian employees.

Non implementation of common pay matrix means that defence pay matrix will be restricted to 24 pay levels even though the bureaucratic pay level is 40.

Another issue of concern is the non-implementation of Non Functional Upgradation (NFU) which would have allowed armed forces personnel to get upper grade of salary even when not promoted like their civilian counterparts.

One of the main grudge that the armed forces have is with regard to risk-hardship matrix. The officers say that a soldier posted in Siachen Glacier, which has the highest degree of both risk and hardship, gets an allowance of Rs 31,500 per month.

In contrast, a civilian bureaucrat from the All India Services draws 30 per cent of his salary as “hardship allowance” when posted anywhere outside the comfort zone.

Under the new scale, a senior IAS official posted in a city in northeast will draw much more as “hardship allowance”, compared to the Rs 31,500 per month drawn by military officers in Siachen.

Source: Hindustan Times

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New Delhi, June 29 (IANS) The Union Cabinet, which on Wednesday announced implementation of the 7th Pay Commission, has decided to constitute three separate committees, including one to look into the anomalies likely to arise out of enforcement of the commission’s Report.

“The two separate committees constituted includes for suggesting measures for streamlining the implementation of National Pension System (NPS) and to look into anomalies likely to arise out of implementation of the Commission’s Report,” said the statement.

The cabinet approved the Seventh Pay Commission Report’s recommendations for central government employees, which will impact the some 47 lakh central government employees and 53 lakh pensioners.

The cabinet has also constituted a committee to address the implementation issues vis-a-vis revision of pension.

“The general recommendations of the Commission on pension and related benefits have been approved by the Cabinet. Both the options recommended by the Commission as regards pension revision have been accepted subject to feasibility of their implementation,” an official statement said.

Source : http://www.canindia.com/

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Sales of two-wheelers and passenger cars could see a spurt once salaries of government employees are hiked following the seventh pay commission’s recommendations

The panel’s suggestions are set to be adopted by the union cabinet on Wednesday and should boost the fortunes of manufacturers at a time when demand, in the rural markets, is yet to revive.

“With the states and PSUs also set to effect similar hikes, we see a permanent fiscal stimulus of $50 billion over the next two years, with significant multiplier effect on GDP. This should boost consumption, reduce slackness in the economy and step up investment demand. Large consumer discretionary names are likely to be the top gainers in this scenario,” said Religare Capital Markets in a flash report.

Volumes of motorcycles and small cars have remained subdued over the past one year and should see a pick up, say analysts, once disposable incomes of government employees go up.

“Almost 89% of the central government employees are in lowest rung Group C. Further, 53% of the central government employees reside in rural markets and 44% of them are under 40 years of age. While 7th CPC might not be as beneficial due to the absence of arrears, we believe it would still boost demand for two-wheelers especially in rural markets,” said Jinesh Gandhi and Aditya Arora of Motilal Oswal in a note on the sector.

According to report prepared by Credit Suisse, the 6th Pay Commission which was implemented in Aug 2008 resulted in almost a 10-fold increase in Maruti’s sales to government employees between FY08 and FY12. The share of sales to government employees rose in this period from 2% to 15% of total sales.

The seventh pay commission (CPC) has recommended a hike of 25% across categories and would influence over 17.5 million public sector employees including state government, central and state public sector units (PSUs) in the coming few years.

The last pay commission came with arrears of almost two years which also boosted consumption. This time the arrears will be given for eight months and to recover the lost volumes companies may have to wait for a couple of quarters.

In FY 16 Maruti Suzuki’s largest selling car Alto saw its volumes decline by 0.40% to 2,63,422 units when compared to 2,64,492 units in FY 15 as consequence of lack of demand in the rural areas. The entire small car segment of Maruti which still constitutes 22%- 25% of the total volumes – saw a small increase of 1.7% in the last fiscal year. The Gurgaon based company still gets 35% of its volumes from the rural market.

Motorcycle volumes also declined by 0.23% to 1,07,00,466 units during the last fiscal year. Hero Motor Corp – India’s biggest two wheeler manufacturer- was adversely impacted as 50% – 55% of the total volumes came from the rural markets.

“The seventh pay commission will help the make A and B segment cars recover the volumes as 50% of the government employees stay in the rural corners. Also companies like Hero, TVS and Bajaj are also set to benefit from the increased income of government employees,” said as automotive analyst with an institutional brokerage firm.

Since the recommendations are set to be implemented from August, the automobile industry is gearing up for a healthy festival period. Companies like Tata Motors have already launched schemes for government employees.

According to experts, the pay hike of government employees will provide an opportunity for companies like Tata Motors, General Motors, Honda, Ford and others to gain volumes as well apart from the top three car makers.

Source: FE

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New Delhi: Railways has sought a financial grant of about Rs. 32,000 crore from Finance Ministry to tide over the the impending impact of Seventh Pay Commission recommendations on the public transporter.

In a letter to Finance Minister Arun Jaitley, Railway Minister Suresh Prabhu cited the prevailing financial position of railways, efforts at cost cutting and possible gradual adjustment of fares and other non-tariff revenue measures to absorb the impact while requesting the exchequer’s help for implementation of the Commission recommendations.

“I would therefore earnestly request you to help the Ministry of Railways and handhold it for the implementation of Seventh Pay Commission recommendations,” the Railway Minister said in the letter.

“This may be done either through compensation of loss for coaching services (Rs 31,727 crore in 2013-14) or directly by virtue of a revenue grant, matching the amount of the Seventh Pay Commission’s liability placed upon railways for the next 3-4 years,” he said.

In a letter to Finance Minister Arun Jaitley, Railway Minister Suresh Prabhu cited the prevailing financial position of railways, efforts at cost cutting and possible gradual adjustment of fares and other non-tariff revenue measures to absorb the impact while requesting the exchequer’s help for implementation of the Commission recommendations.

“I would therefore earnestly request you to help the Ministry of Railways and handhold it for the implementation of Seventh Pay Commission recommendations,” the Railway Minister said in the letter.

“This may be done either through compensation of loss for coaching services (Rs 31,727 crore in 2013-14) or directly by virtue of a revenue grant, matching the amount of the Seventh Pay Commission’s liability placed upon railways for the next 3-4 years,” he said.

Prabhu hoped that during this 3-4 years period, railways would be able to absorb the impact from their resources through gradual adjustment of fares and other non-tariff revenue measures.

However, Railway Minister has expressed his reservation about increasing the freight rate in the given scenario contending that it would have a “deleterious impact” on national economy.

He said, “In order to maintain these expenses at the current proportion – at 51.5 per cent of the gross receipts, the railway revenues will need to grow substantially by 40 per cent in 2016-17 which is well nigh impossible given the fact that till October 2015 growth was only 8.4 per cent.

“The first factor of freight earnings originating loading is demand driven and is largely not within the control of railways. The second factor that is freight rates, though is within railways competence, there is hardly any headroom available for increasing the same without affecting railways competitiveness adversely.”

He said, “Moreover, exercising this option will have a deleterious impact on the national economy as well as on critical sectors such as coal, cement, foodgrains.Prabhu hoped that during this 3-4 years period, railways would be able to absorb the impact from their resources through gradual adjustment of fares and other non-tariff revenue measures.

However, Railway Minister has expressed his reservation about increasing the freight rate in the given scenario contending that it would have a “deleterious impact” on national economy.

He said, “In order to maintain these expenses at the current proportion – at 51.5 per cent of the gross receipts, the railway revenues will need to grow substantially by 40 per cent in 2016-17 which is well nigh impossible given the fact that till October 2015 growth was only 8.4 per cent.

“The first factor of freight earnings originating loading is demand driven and is largely not within the control of railways. The second factor that is freight rates, though is within railways competence, there is hardly any headroom available for increasing the same without affecting railways competitiveness adversely.”

He said, “Moreover, exercising this option will have a deleterious impact on the national economy as well as on critical sectors such as coal, cement, foodgrains.”

According to the Pay Commission report, the annual financial impact on Railways will be approximately Rs 28,450 crore in addition to the normal growth which will require to be built into the Railway Budget 2016-17.

“Our initial assessment however is that this additional impact would be around Rs 30,031 cr over and above the normal assessed growth of Rs 10,816 cr,” Railway Minister stated.

Prabhu has pointed out that the Railways bear 35.6 per cent of the total pay and allowances of the government which is more than 1/3rd of the Pay Commission’s burden for serving staff would be borne by railways. “Further nearly 28 per cent of the pension impact of central government would be on the Railways,” the letter sent last week said.

Currently, pay and allowances and pension account for 51.5 per cent of the gross receipts of railways. With the financial impact of the Seventh Pay Commission, this will increase to 68 per cent of the gross receipts in 2016-17 at present level of growth.

Prabhu has also mentioned the details about the cost cutting measures in railways.

“While we have put in place serious cost cutting measures and are focusing on fuel management and lowering of staff intake, more than 2.3rd of the railway expenditure is inelastic – staff cost, pension, lease charges, maintenance of fixed assets.”

Prabhu has sent a detailed note along with the letter on the Railways financial position vis-a-vis impact of Seventh Pay Commission’s recommendation.

PTI

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7th CPC allowed Overtime Allowance (OTA) to continue in Industrial Establishments of Defence and Railway

Overtime Allowance (OTA) is granted to government employees for performing duties beyond the designated working hours.

Presently, OTA is paid in several ministries/ departments, up to a certain level, at varying rates.

Though the III, IV V and VI Pay commission recommended to abolish the Over time allowance except where it is a statutory requirement, it was continued in some departments even when it is not a statutory requirement.

But JCM-Staff Side has demanded that OTA should be paid to all government employees who are asked to work beyond office hours, on the basis of actual Pay, DA and Transport Allowance.

The commission obseved that 90% of total expenditure on Over time allowance is spent in Defence and Railway. So the recommendation on Over Time Allowance is expected very much by the employees of these two Ministries

The 7th pay commission suggested in its recommendation that

“…..government offices need to increase productivity and efficiency, and recommends that OTA should be abolished (except for operational staff and industrial employees who are governed by statutory provisions), at the same time it is also recommended that in case the government decides to continue with OTA for those categories of staff for which it is not a statutory requirement, then the rates of OTA for such staff should be increased by 50 percent from their current levels”.

A stricter control on OTA expenditure is also suggested

So the employees of Ministry of Railways and Defence breathed sigh of relief as the Pay commission recommended to continue the Over time allowance.

Source: http://www.gservants.com/

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7th CPC Recommendation on Pay Structure, Annual Increment, HRA, DA, MACP, Promotion ,Pay Fixation Benefit will be known

All our doubts will be cleared and queries will be answered after submission of 7th pay commission report to Finance Minister today.

The VII Pay commission was appointed on 28th February 2014 to revise the pay and allowances of central government employees and the commission took twenty months time to complete its tedious but sensitive task. On 18th November 2015, the official website of Seventh pay commission informed that the commission is prepared to submits its report to Finance Minister on 19th November 2015 at 19:30 Hrs.

The news created buzz over internet and government staffs expectation went sky high because of many reasons.

The result of recommendations of 7th pay commission to be submitted to the government today will decide the financial future of the 35 Lakh Central government employees and 50Lakh pensioners. And of course it will impact 185 Lakh government employees of Central and state together, since the seventh pay commission recommendation will be followed by state government also.

All the central government employees very keen to know the 7th Pay Commission recommendation on the following important matters.

1.Amount of Increase in Basic Pay : There were many news and roumers circulated about the amount of Increase over Basic Pay. It is now expected 15 to 30 % increase will be there in the recommendations of Pay commission.

2. 7th CPC Pay Structure: Whether existing system [Pay Band and Grade Pay] continues or not ?.

Federations claimed that pay commission accepted to drop the Grade Pay and Pay band System and old Pay Scale system with open ended Pay scale would be recommended. This would be a critical decision as both the systems has its own advantages and dis advantages.

3.Annual Increment : How much it will be granted?

At least 5% of the Basic Pay has been expected as annual increment in 7th Pay commission. Some doubts are there that Performance based Increment and Promotion will be recommended by the Pay commission. But it is not feasible for implementing this proposal in Govt Sector.

4. MACP in 7th Pay commission : Federation demanded 5 MACP to be ensured in ones career. But it expected 4 MACP s will be granted. But the main plea of Central government Federation is MACP should be granted on Promotion hierarchy instead of Grade pay hierarchy.

5.Pay Fixation on Promotion : In the existing system it is reported that Pay fixation on promotion created anomaly and and it lead to Junior gets higher Pay than Senior Govt servants. There should be definite Pay Scale and Pay for respective promotion is expected with the benefit of 10% increment on pay fixation

6. House Rent Allowance

NCJCM Proposal demanded 60%,40% and 20% of HRA instead of 30%,20% and 10%. But it is not known how much the 7th pay commission decided to grant on HRA

7. Dearness Allowance

DA Calculation will be revised and it is expected the pay commission to recommend merger of dearness Allowance whenever DA reaches 50%

8. All other Allowances

All the other allowances including CCA, TA to be proportionate to the amount of increase in rate of Dearness Allowance.

All the above matters will be cleared by this evening and let us wait for 8 more hours to know the all the information. But whatever it is recommended in the 7th pay commission report is not final and it is subject to modification based on the impact and objections and responses both sides from central government and government servants, unions and Federations.
Source: gservants.com

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