All Circle Secretaries, CHQ Officer Bearers, members and track in
viewers are requested to furnish thier views to GS by email-tnrahate@yahoo.com
on or before 5/12/201
5.
Monday, November 30, 2015
Inviting suggestions for improving the format of e-service book: DoPT Order
No.21011/15/2010-Estt.(AL)
Government of India
Ministry of Personnel, Public Grievances and Pensions
Department of Personnel & Training
Block-IV, Old JNU Campus,
New Delhi – 110 067,
Dated: November 24, 2015.
Office Memorandum
Subject: Inviting suggestions for improving the format of e-service book.
The undersigned is directed to state that it has been decided to
implement the e-service book across all the Ministries/Departments and
attached and subordinate office of the Government of India. Accordingly,
software has been developed by NIC in consultation with the DoP&T.
The screenshots are appended herewith.
2. All Ministries/Departments and the Central Government servants are requested to give suggestions for improvement latest by 14th December, 2015, to the undersigned.
(Mukul Ratra)
Director
No.21011/15/2010-Estt.(AL)
Government of India
Ministry of Personnel, Public Grievances and Pensions
Department of Personnel & Training
Block-IV, Old JNU Campus,
New Delhi – 110 067,
Dated: November 24, 2015.
Office Memorandum
Subject: Inviting suggestions for improving the format of e-service book.
The undersigned is directed to state that it has been decided to
implement the e-service book across all the Ministries/Departments and
attached and subordinate office of the Government of India. Accordingly,
software has been developed by NIC in consultation with the DoP&T.
The screenshots are appended herewith.
2. All Ministries/Departments and the Central Government servants are requested to give suggestions for improvement latest by 14th December, 2015, to the undersigned.
(Mukul Ratra)
Director
Squeeze on salary increases of central government employees by 7th CPC
The central government sets up a Pay Commission about once every ten years to recommend what the structure of salaries, allowances and pensions for its current and retired employees should be. The seventh Pay Commission had been set up accordingly by the UPA government before it left office and it submitted its report to the finance minister on November 19, with the suggestion that its recommendations should be implemented with effect from January 1, 2016. While the precise implications of the report it has submitted remain to be fully worked out, a number of things are already very clear.
SQUEEZE ON : SALARY INCREASES
First, the Seventh Pay Commission has imposed a drastic squeeze on salary increases of central government employees. In fact it has been far more niggardly in this respect than perhaps any other previous Pay Commission since independence. Even a cursory comparison between the sixth and the seventh Pay Commissions makes the severity of this squeeze clear.
Between 1995-96 and 2005-06, which is the interregnum between the fifth and the sixth Pay Commissions, the rate of inflation according to the official Consumer Price Index for Industrial Workers had been 73 percent. By contrast, between 2005-06 and 2015-16, the rate of inflation by the same index is likely to be at least 120 percent. The seventh Pay Commission in other words had to reckon with an erosion in the real emoluments of central government employees that was far greater than what the sixth Pay Commission had to reckon with (and such an erosion necessarily occurs despite the institution of Dearness Allowances).
Since, between 2005-06 and 2015-16, the ratio of the government sector’s salary bill to the total GDP of the country has not gone down, but has instead gone up, given the much higher inflation in the latter period, one would have expected the increase in the magnitude of emoluments, relative to GDP, recommended by the seventh Pay Commission, to be significantly larger than what the sixth Pay Commission had recommended. Instead what we find is the exact opposite. While the increase in the ratio of the central government’s emoluments bill to GDP recommended by the sixth Pay Commission was 0.77 percent, the increase recommended by the seventh Commission is only 0.65 percent. And this is so despite the fact that the rate of growth of GDP has slowed down considerably between then and now.
The Pay Commission in short has heeded the clamour for “austerity” in public spending which finance capital always generates, and which typically characterizes a neo-liberal regime, and has unfairly penalised the government employees to give effect to it.
The second obvious point is that it has been specifically harsh on the lower paid employees compared to the higher-paid government employees. This is clear from the increase in the ratio of the maximum to the minimum pay it has recommended. While the earlier maximum was Rs 80,000 which has been raised to Rs 2.25 lakhs (let us ignore the proposed salary of Rs 2.5 lakhs for the cabinet secretary), the earlier minimum was Rs 6,600 which has been raised to Rs 18,000. The maximum to minimum ratio which was 12 percent earlier has thus been increased to 12.5. A ratio of 12.5 is itself inordinately large; but the fact that it constitutes an increase at all is a regressive step.
This increase in inequality within the structure of central government salaries is confirmed by other information too. Private calculations suggest that the person with the minimum salary was, together with all allowances, getting around Rs 15,750 per month prior to the Pay Commission report. Such a person would now be getting Rs 18000 which represents an increase of 14 percent. Now, the total salary-cum-allowance-cum-pension bill of the central government is supposed to rise by 23.55 percent, of which the hike in pensions alone is about 24 percent, which is of a broadly similar order. It follows therefore that the increase in total salaries-cum-allowances is also around 24 percent, compared to which the 14 percent increase in the emoluments of the lowest-paid is of a much smaller magnitude. It follows that the lowest paid central government employee is even worse affected by the “austerity” practiced by the Pay Commission than the average central government employee.
Both these tendencies, of a squeeze on the real emoluments of central government employees (and hence of state government employees too, since states tend to maintain the relativity of the pay-structures of their employees with those of the centre), and a widening of disparities within these emoluments, are part of the logic of a neo-liberal economy; unless they are resisted, they would accentuate over time.
EFFECTS OF ECONOMIC LIBERALISATION
The reason is simple. Prior to economic “liberalisation” the government imposed some restraint on the level of salaries of theprivate sector executives as well. This was done not only through the tax system but also through direct pressure. The marginal tax rate those days on incomes beyond a certain level even exceeded 100 percent! This was often a subject of derision in neo-liberal circles, indicating, according to them, the “irrationality” of the dirigiste regime (“How can you have an above-100 percent marginal tax-rate”!); but what it meant in effect was an income-ceiling, that post-tax incomes simply could not exceed a certain level. No doubt there was evasion of tax payment and hence “black” incomes that were much higher, but the legal position at least amounted to an income-ceiling.
Likewise, quite apart from tax policy, the corporate sector was under direct pressure from the government in the wake of the FERA legislation, to keep down the salaries to its top executives. No doubt again, they made up for such restraint through the provision of “perks” of various kinds, but these too had to be restrained because the government’s predilection was clear. With “liberalisation” all these restraints have gone.
Newspapers almost every day carry stories about how fresh IIT or IIM graduates are getting recruited at annual salaries of Rs 2 crores or more, which comes to a monthly salary of almost 17 lakh rupees. This is nearly seven times what the highest-paid civil servant of the country, the cabinet secretary, gets. The utter irrationality of a salary-structure where a fresh graduate from an IIT or an IIM can get a salary that is seven times that of the senior most civil servant, is obvious. Such a disparity between private sector and government sector salaries, which exists essentially at the executive level, would either encourage “corruption” among government officers (to “make up for the difference”), or lead to their arbitrary exercise of authority (where the vicarious satisfaction obtained from a sheer display of power is taken as a “perk”), or lead to a drain of talent from government employment to the private sector.
Such a drain has already been in operation for some time in crucial sectors like healthcare. The salaries offered to doctors even in the most prestigious public institutions of the country like the All India Institute of Medical Sciences are just a fraction of what private healthcare facilities offer. Though this has not led to large-scale migration from the public to the private sector, which speaks well of the public medical personnel, it has nonetheless resulted in some outflow of talent. If such an outflow exists even from these prestigious public institutions, the state of public healthcare institutions in the hinterland of the country can be imagined. Devoid, at least in the public perception, of talented personnel, they lose their effectiveness as healthcare providers. The patients too therefore migrate to private facilities, despite having to pay exorbitant fees; and the privatisation of healthcare, which fleeces the people, gathers pace.
Faced with this scenario, the government, at least in the sphere of administration, would tend to raise emoluments to some extent in the top echelons to retain its personnel. Indeed among the terms of reference of the seventh Pay Commission there was an explicit reference to the need for retaining the services of officials who might otherwise be lost to the private sector. But even though the government cannot match the private sector in salaries, its efforts to retain personnel who can be potentially lured by higher salaries in the private sector, necessarily introduces greater inequality into its own overall salary structure.
This inequality exists within the private sector already, where some get emoluments amounting to crores while others get a pittance. The logic of neo-liberalism is to reproduce it within the government sector as well, and hence also to effect an overall squeeze. This is because even such an attempt to retain personnel belonging to the higher echelons imposes a heavy demand on the government’s resources which are in any case squeezed under neo-liberalism through both the FRBM and the provision of largesse to the corporate-financial oligarchy.
The point I am making is not that the government needs to raise the salaries of its better-paid personnel to prevent their migration to the private sector, or that it has no alternative to what the seventh Pay Commission has done; the point is that the logic of neo-liberalism pushes it in this direction, of “austerity” and inequality, and that this logic must be resisted. Reining in private sector salaries, which have reached absurd levels that are incompatible with the ethos of a democracy, is a part of that resistance. Such salaries however come largely out of the economic surplus, which capitalists choose to share with their top executives; reining in these salaries must necessarily entail controlling the size of this surplus, through larger taxation to start with.
Even the advanced capitalist world is talking these days of the problem of growing inequality, as the buzz following Piketty’s book demonstrates. Even the latest Davos summit of the rich listed growing inequality as one of the major problems confronting contemporary capitalism. It is time that the Indian public opinion is roused on this issue.
Source: peoplesdemocracy
Sunday, November 29, 2015
Public Services International /LOTCO Trade Union Rights Project meeting at Cochin
PSI/LOTCO Trade Union Rights Project is holding Evaluation meeting at Cochin on 2nd and 3rd December 2015.
Shri Manjunath Hubballi,
Circle Secretary Karnataka Circle and Ms Devi Vijayan ASP CSD
Trivandrum (Kerala) are representing our Association in the meeting.
In the said meeting followign issues are likely to be discussed :
- To secure legal trade union rights for public employees,
- To ensure active participation of women workers in decision making,
- To work towards creating safe and secure work places free of harassment,
- To organise, recruit and educate young, women and informal workers in public services to enhance membership and strenghten the trade unions
Govt to bring Bonus Act amendment bill
New Delhi, Nov 28, 2015, DHNS: Government will introduce a bill in the ongoing
winter session to amend the Bonus Act,
1965, Prime Minister Narendra Modi told Parliament on Friday. Replying to the two-day special debate to mark the Constitution Day and Dr BR
Ambedkar’s 125th birth anniversary, Modi said: “We are going to bring an
important bill in this House to amend Bonus Act. The Cabinet has already
approved it. This is a very important bill for our workers. We are taking
decisions and working for welfare of the labour class.”
Bonus calculations :
The amendment bill seeks to enhance extent of coverage for payment of bonus from the existing wage limit of Rs 10,000 to Rs 21,000 per month as well as the calculation limit for payment of bonus from Rs 3,500 to Rs 7,000 per month.
The Union Cabinet had approved the amendment in the Payment of Bonus Act 1965 for the Industrial workers last month, making them eligible for the reward.
Saturday, November 28, 2015
Central Govt Employees To Get PPO, Other Benefits On Retirement Day
New
Delhi: The government has decided to give pension payment order (PPO) and all
other retirement benefits on the day of retirement to all 50000 central
government employees retiring every year, Union minister Jitendra Singh said on
Thursday.
“The
goal is to ensure 100 per cent payment of all retirement benefits and the
delivery of pension payment order (PPO) to retiring employees on the day of
retirement itself,” The Minister of State for Personnel, Public Grievances and
Pensions Jitendra Singh said at the inauguration of a workshop on ‘Bhavishya ’, an online pension sanction and
payment tracking system for central government retirees.
“Last
year of a retiring employee is spent in preparation of pension payment order
(PPO) and collecting no-dues certificates as he fears no one will let him in
after he retires. The reputation of a retiring government servants becomes such
that he is preparing to get his pension on time. This is just not done,” Singh
said
“Our
experience shows pension payments are considerably delayed. Retirees need a
dignified exit from service and can’t be expected to run around for their
pension payment order (PPO) and all retirement benefits or make requests to
someone for it,” said an official on this occasion.
Bhavishya involves preparation of advance
list of employees retiring in the next 12 months and sending each such employee
a login and password for ‘ Bhavishya ‘
portal eight months before the date of his retirement on his mobile phone and
e-mail ID.
The
employee fills up his details on the portal and based on that information,
pension forms are auto-generated by the software and submitted for processing.
The system then sends SMS and e-mail alerts to the employee, his head of
department and disbur...
The
Minister said apart from ensuring timely disbursal of pension, the Department
is also holding pre-retirement counselling for employees and considering
various options on how best to utilize the experience of retired personnel who
can contribute a lot to the government and society as they are energetic and
resourceful for long beyond 60 years of age.
Source
:http:// tkbsen.in
Friday, November 27, 2015
Uniform Fitment Factor recommended by 7th Pay Commission
Uniform Fitment Factor recommended by 7th Pay Commission
The existing PB-1, this index is 2.57, increasing to 2.62 for personnel
in PB-2 and further to 2.67 from PB-3. The rationalised entry pay so
arrived has been used in devising the new pay matrix.
The 7th Pay Commission recommended uniform fitment factor for all group
of Central Government employees. The commission says that the fitment
recommended by the VI CPC was in the form of grade pay. Any
inconsistency in the computation of grade pay or in the spacing between
pay bands has a direct bearing on the quantum of fitment benefit.
Therefore, these issues have also been raised by numerous stakeholders.
It has been demanded by a majority of the stakeholders that there should
be a single fitment factor which should be uniformly applied for all
employees.
The 6th CPC had mentioned that grade pay would be equivalent to 40
percent of the maximum of the pre-revised scale and that the grade pay
will constitute the actual fitment, yet the computation varied greatly.
After the implementation of recommendations, the difference became more
pronounced in Pay Band 4 as compared to the other three pay bands. This
resulted in varying fitment factors for various levels and promotional
benefits that were perceived to be rather differentiated. The same
pattern was discernible in the pension fixation too.
7th Pay Commission Report : More flaws than plus point
7th Pay Commission Report : More flaws than plus points
The much-awaited 7th Pay Commission report was submitted to the
government last Thursday. The 900-page long report was perused swiftly
within a day or two and criticisms have already started coming.
The very next day of submitting the report, M. Krishnan, the
Confederation Secretary, gave a scathing criticism. “No other Pay
Commission had submitted such a terrible report,” he said. At the very
beginning of the press release, he had mentioned that the backward
mindset of the recommendations of the Pay Commission have been a huge
disappointment for the Central Government employees.
Contrary to all the wild speculations, a raise of only 14.29 percent was
finally given to the Central Government employees. This increment is
akin to two installments of the Dearness Allowance. He has strongly
stated that more than 50 lakh Central Government employees and Defence
Personnel have been cheated.
The 6th Pay Commission recommended 10 percent, 20 percent, and 30
percent House Rent Allowance for ten years starting from 01.01.2006. The
intention behind reducing it to 24 percent, 16 percent and eight
percent was not explained. Despite being very well aware of the fact
that the recommendations will be in effect until 2026, the fact that the
Pay Commission had tried to reduce the allocation has left the Central
Government employees greatly disappointed.
MACP Promotions: Among the biggest disappointments of the 7th Pay
Commission report is the fact that promotions, which are given once
every ten years, so not earn any substantial benefits for the employees.
They stand to gain only 3 percent hike. Another painful observation is
the fact that the gap between Grade Pay 2800 and 4200 has been
completely reduced.
The next big disappointment is the method of calculating the dearness
allowance. This was one of the much-anticipated parts of the report.
There is no clear explanation as to the reason why changes had to be
made in the CPI IW BY 2001=100 method, or the 115.76 Factor.
On top of it all, the commission has introduced a new “Pay Matrix.” Our
expectations of a detailed explanation about it were never fulfilled. 3
percent of the amount has been rounded off and given for each CELL.
In short, the 7th Pay Commission report is on the receiving end of lot
of criticism. Central Government employees are now hoping that the
Centre would intervene and do something positive for them.
Source: www.cgstaffportal.in
Thursday, November 26, 2015
Setting up of Implementation Cell, Seventh Central Pay Commission in the Expenditure
Setting up of Implementation Cell, Seventh Central Pay Commission in the Expenditure
A-11019/8/2015-Ad.I
Government of India
Ministry of Finance
Department of Expenditure
North Block, New Delhi.
Dated 20 November, 2015
OFFICE MEMORANDUM
Subject: Setting up of Implementation Cell, Seventh Central Pay Commission in the Department of Expenditure
An Implementation Cell for processing and implementing the accepted
recommendations of the Seventh Central Pay Commission is set up in the
Department of Expenditure, M/o Finance for a period of one year with
effect from the 20th November, 2015, with the complement of staff
structure as mentioned under:
2. Joint Secretary (Personnel), Deptt. of Expenditure shall head the
Implementation Cell in addition to her current responsibility till the
post of Joint Secretary, Implementation Cell is created.
3. This issues with the approval of Hon’ble Finance Minister.
(S.K.Biswas)
Under Secretary to the Govt. of India
Authority : www.finmin.nic.in
Recommendations of Overtime Allowance (OTA) in 7th Pay Commission
Recommendations of Overtime Allowance (OTA) in 7th Pay Commission
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/
BPS writes to Finance Minister pointing out 7th CPC shortcomings
7th Pay Commission Shortcomings – BPS writes to FM
BPS writes to Finance Minister pointing out 7th CPC shortcomings.
BHARAT PENSIONERS’ SAMAJ
(All India Federation of Pensioner’s Associations)
New Delhi -110014
SG/BPS/ 10/2015
New Delhi-Dt. 25-11-15
To
Dear Shri Arun Jaittleyji,
Honourable Minister of Finance
Government of India
Subject : 7th Central Pay Commission report released on 19.11.2015
Sir. With deep resentment and pain BHARAT PENSIONERS SAMAJ( BPS) the
oldest & the largest Federation of Indian pensioners which is a
conglomerate of over 650 Pensioners Associations appeal to you to
redress the following issues which 7th CPC failed address:
1. Ratio between minimum and maximum: Instead of reducing it is raised
which is against the preamble of the Constitution of Indian Republic.
2. Minimum salary has been intentionally calculated to be lower to keep
common fitment factor low. Counting employees’ wife as 0.80 unit is
gender biase and is totally unjustified. Quantities & rates taken
for the items in basket are unrealistic for example Rs 524.07 per month
is provided Even the lowest category of Govt. accommodation is not
available at this rate. Similarly rate of ‘Dal’ is taken to be 97.84 per
Kg. No ‘ Dal‘ is or was available in the market at this rate. Quantity
of Milk is taken to be 200 ml per unit per day which is too little for a
vegetarian rate of Milk is taken to be Rs 37.40 per Kg which is lower
than market rate.
3. According to 7th CPC 2.57 fitment factor is for all employees. But,
in fact. 2.81 fitment has been given at Secy level. This is robbing
Peter to pay Paul, violative of CPC own recommendation and that of
Article 14 of the constitution of India. 2.81 fitment benefit should be
provided to all employee without any discrimination.
PENSION CALCULATORS FOR CG PENSIONERS
4. Raising percentage of pension based on sustenance: Analysis given by
CPC is silent on sustenance this is unjustified rejection.
5.OROP recommended by 7th CPC for all. But through the jugglery of pay
matrix, for promotee officers and group ‘C.‘ it will end up only in
modified parity. This needs rectification to ensure absolute parity for
all.
6. Additional pension at 75 yrs of age is denied only because Defence
Ministry did not agree this is rather absurd. If Defence Ministry does
not want to have it, let them not have it. Why make others suffer on
this account?
7. Medical facilities : While the Commission’s recommendations regarding
merging of all postal dispensaries with CGHS dispensaries and inclusion
of non CGHS covered postal Pensioners are welcome.
However, its recommendations regarding Health insurance for pensioners
do not suit existing pensioners on account of no coverage of existing
disease without lock-in period, no provision of OPD facility , payment
of premium and less amount of coverage.
Under signed, wish to draw your kind attention to para 9.5.18 (iii) of
the 7th CPC and request you to create without delay a combined entity of
CGHS, ECHS-RELHS which in terms of 7th CPC would result in a very
strong network of health facilities for the Central Government
employees/pensioners across the length and breadth of the country.
8.Scraping of New Pension scheme(NPS) :It has come out through 7th CPC
report that though NPS was introduced more than a decade back Govt; to
date could not firm up rules in this regard. With the result over 300000
employee recruited after 2004 may not have enough funds in their
accounts at retirement to ensure financial security. Center and state
Govt’s share of contribution is insufficient and these governments are
not depositing their contribution in time, investments are subjected to
service tax & withdrawals are taxable under Income Tax with the
result there would not be enough money for reasonable post retirement
financial security. Due to ever rising inflation, this situation will go
on worsening year by year and will go out of hand by the time of
retirement of the beneficiary. This is more than sufficient reason to
scrap NPS & to revert to pre 2004 defined benefit Pension Scheme.
Thanking you in anticipation.
sd/-
S.C.Maheshwari
Secy. General Bharat Pensioners Samaj
Source: http://scm-bps.blogspot.in/
Why we must not grudge them a pay hike
In the heyday of Indian
socialism, the perception of government was benign. In today’s climate of
liberalisation, the government is viewed with hostility. That must explain the
negative reaction both in the media and amongst the public at large to the increases
in pay for Central government employees recommended by the Seventh Pay
Commission (SPC).
The pay hikes are
modest — embarrassingly so in comparison with pay
increases and bonuses in the private sector. Yet, media reports talk of a ‘bonanza
for babus’. The impact on the fiscal can be easily digested by the Indian
economy. Yet, analysts warn of slippages in the fiscal deficit, a possible
boost to inflation, and a setback to public investment. Do we want to run the
government — which comprises not just civil servants but the police, armed
forces, nurses, doctors, regulators and academics — at all? Or have we
persuaded ourselves that all of the government is simply money down the drain?
Setting pay in government
The SPC’s figures don’t come out of nowhere. The Commission has a rigorous
basis for setting pay in government. It arrives at a figure for minimum pay in
government with reference to norms laid down by the 15th Indian Labour
Conference (ILC) in 1957. The ILC had said that the minimum wage should cover
the basic needs of a worker and his family, that is, a spouse, and two children
who are below the age of 14. The SPC has spelt out the norms it has used for
determining basic needs. It has gone by food requirements specified by a
well-known nutritionist. To this are added provisions for clothing, fuel and
lighting, education, recreation, festivities, medical expenses, and housing.
There is an addition of 25 per cent to the total of the above to provide for
the skill factor (the basic needs having been determined for an unskilled
person). The SPC report provides detailed computations for each of these items.
No reasonable person can accuse the SPC of being overgenerous.
Based on these norms, the SPC arrives at a minimum wage of Rs. 18,000 for a
government employee. This is 2.57 times the minimum pay in the Sixth Pay
Commission. The increase over the projected pay on the current basis as of
January 1, 2016 is 14.3 per cent. This is the second lowest increase recommended
by any Pay Commission since the first one, and it is way below the 54 per cent
increase following the last one. The multiplication factor of 2.57 is used to
arrive at pay for all levels of government except for a few at the top where a
slightly higher multiple is used.
As before, pay at the lower levels of government is higher than in the private
sector; at the top, the position is reversed. In today’s context, this may not
be a bad thing at all. Pay in the private sector today is contributing towards
massive inequalities in Indian society. Having a very different structure in
government is a useful corrective to trends in the private sector. It will help
contain tensions created by rising inequality.
Good news
So far as the impact on
government finances is concerned, the SPC numbers provide a stream of good
news. First, the impact of the pay hike on the Central government (including
the railways) will amount to 0.65 per cent of GDP. This is less than the impact
of 0.77 per cent of GDP on account of the Sixth Pay Commission.
Second, the impact on the Central government (excluding Railways), which is
what matters when it comes to the Union budget, is 0.46 per cent of GDP. As
some of the increase in salary comes back to the government as taxes, the
impact, net of taxes, will be even less — say, 0.4 per cent of GDP (assuming an
average tax rate of around 20 per cent on government pay). This is a strictly
one-off impact. The correct way to view it, therefore, would be to amortise it
over a period of, say, five years. The annual impact then is 0.08 per cent of
GDP. The impact on the fiscal at the central level is barely noticeable.
Trends in the wage burden in the government are worth noting. Pay and
allowances in the Central government have remained stable since 2010-11 at
around 1.8-2.0 per cent of GDP. Thus, pay and allowances have been rising at
roughly the same level as nominal GDP or 11-12 per cent. This is the increase
after taking into account increments, adjustments for dearness allowance and
promotions. In the private sector, such an increase would be considered
laughable at all but the lowest level.
Pay, allowances and pension (PAP) as a proportion of government expenditure has
been declining sharply. In 1998-99, PAP was 38 per cent of revenue expenditure.
The SPC estimates that this figure has fallen to 18 per cent in 2015-16. (It
will go up to 22 per cent in 2017-17 consequent to the SPC award, but will
decline thereafter, as pay grows at a lower rate than government expenditure).
The implication is striking: in financial terms, the workforce in government
has been effectively downsized by nearly half over the past 17 years.
Pay in the private sector
is contributing towards massive inequalities in society. Having a different
structure in government will help contain tensions created by this inequality
Even in terms of numbers, India’s central bureaucracy (including the Railways
but excluding the armed forces) has neither been increasing in recent years nor
hugely bloated in absolute terms. The number of employees grew to a peak of
41.76 lakh in 1994. It has declined since to 38.9 lakh in 2014. Of the total,
13.8 lakh is accounted for by security-related entities (police and defence
civilians). Railways and Post, which perform commercial functions, account for
15 lakh personnel. There are other commercial departments as well, such as
Communications. Excluding security and commercial functions, the total central
employment is just 4.18 lakh. “The ‘core’ of the government…”, the SPC report
notes, “is actually very small…”
The SPC substantiates its point by comparing India’s Central government
workforce with that of the federal government workforce in the U.S. In 2012,
the non-postal civilian workforce in the U.S. was 21.3 lakh. In India, the
corresponding figure in 2014 was 17.96 lakh. The number of personnel per lakh
of population in India was 139 in 2014, way below the figure of 668 for the
U.S. India’s bureaucracy needs not so much downsizing as right-sizing — we need
more doctors, engineers, IT specialists, tax experts, judges, and so on.
The government is not bound by the SPC’s recommendations. It can opt for higher
pay hikes as happened with the previous Pay Commission. Assuming the government
goes along with the SPC, what impact on growth can we expect? Increased pay for
government employees means greater government expenditure and hence a fiscal
stimulus — provided government expenditure on other counts is not reduced and the
fiscal deficit rises. This happened at the time of the Sixth Pay Commission.
Higher wages for government employees contributed to a higher fiscal deficit
and helped stimulate growth in the short run.
This time round, the Finance Ministry insists that it will stick to its fiscal
deficit target for 2016-17 after providing for the SPC pay hike. If it does so,
the reduction in fiscal deficit will be contractionary. Hence, the pay hike
will not lead to economic expansion in the aggregate. However, greater income
in the hands of government employees could favourably impact sectors such as
the real estate, automobiles and consumer goods.
(T.T. Ram Mohan is professor at IIM Ahmedabad)
//copy//Courtesy : The Hindu (dt.24th Nov 2015)
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