DOPT exempted the parents of differently abled children from the mandatory transfers

DOPT exempted the parents of differently abled children from the mandatory transfers

Key initiatives of the Department of Personnel & Training (DoPT)

YEAR ENDER 2015

The Department of Personnel and Training (DoPT) has taken various initiatives during the year 2015. These initiatives aim at working in the direction of larger public interest and to establish accountability and transparency.

In a landmark decision, the Government scrapped Interviews for recruitment to lower posts wherever it could be dispensed with. This was followed by the Minister of State for Personnel, Public Grievances and Pensions Dr. Jitendra Singh writing D.O. letters to Chief Ministers of all States in September to take the lead in carrying forward this initiative with respect to State Government jobs.

The discontinuation of interviews will not only be in larger public interest but would also offer a level playing field and benefit youth hailing from the lower socio-economic strata. Interviews will be dispensed with for all Group C and Group D posts which are now reclassified as Group C posts. Interview would also be discontinued for non-gazetted posts of Group B category. The process of doing away with interview for these posts will be completed by 31.12.2015. In those cases pertaining to non-gazetted Group B posts and Group C & D posts, where Recruitment Rules specify the process of selection which includes conduct of interview, the Ministries/authorities concerned will take necessary steps to carry out the requisite amendment to the Recruitment Rules immediately. Necessary directions have also been issued to the Staff Selection Commission in this regard.

In a big relief to the common people, the DoPT discontinued the practice of submission of affidavit by the family members of deceased Government employees for the appointment on Compassionate grounds. Now they are required to submit self-declaration at the time of applying for compassionate appointment. It will ensure fast process of compassionate appointment and help family members of deceased Government employee immensely.

For the first time in the history of the Indian Administrative Service (IAS), the Officers of 2013 batch of IAS were posted as Assistant Secretary in the Central Secretariat for a period of three months. Exposure to Central Government functioning will provide insight into policy formulation at the Centre to these officers. These officers left for their field posting with a macro picture of such policies which will help them in effective implementation of the schemes keeping citizen at the centre.

In another novel initiative, the DoPT has started Yoga camps for the Central Government employees and their dependents. The Yoga training sessions are conducted in 29 locations (26 Samaj Sadans of Grih Kalyan Kendra and 3 other places) in Delhi and 12 Samaj Sadans of Grih Kalyan Kendra outside Delhi. Approximately 1900 individuals are benefiting from this scheme per day. With this initiative, the employees would be able to de-stress themselves and also take control over various lifestyle diseases like obesity, hypertension, Hyperglycemias etc. The healthy & happy employees would be able to perform more effectively in their office work.

The Department has also started an innovative scheme for the training of the cutting edge level employees of the State Governments. In the first phase, masters trainers are being trained by the ATIs in collaboration with DoPT. These trainers will impart training to the field level employees. Emphasis of the training will be on citizen centricity. Pilot projects had been started in Maharashtra, J&K and Tamil Nadu. It has now been extended in other States. Training will bring an attitudinal change in these employees which in turn will result in increased citizen friendly environment in the field offices.

DOPT also exempted the parents of differently abled children from the mandatory transfers so that they can take proper care of their differently abled child. This move will ease the pain of these parents and ensure care and upbringing of these children.

A weekly one hour in-house training programme for its employees was started. Three modules of the training programme have been completed and the fourth module is currently running. The employees are imparted up-to-date information on various aspects of day to day work in the office. This gives an opportunity to the employees to clear their doubts and the input given in the session is found very useful for them in discharging their duty more accurately, efficiently and effectively. This has speeded up the rate of disposal of work and the ultimate beneficiary of the same are the citizens.

The scheme of interaction of Officers with School Students has been launched in which the Officers of Government of India visit Schools and share their experiences with the School Students. As a pilot, the Senior Officers of DoPT have visited Kendriya Vidyalayas in Delhi and interacted with the students. The interaction of Senior Officers with School Students will have a long lasting impact on their impressionable minds. They will also get a glimpse of the functioning of the Government.

Source: PIB News

MACP on Promotional Hierarchy – Written reply in Parliament

MACP on Promotional Hierarchy – Written reply in Parliament

MACP on promotional grade

The employees including Group ‘C’ (which includes erstwhile Group ‘D’) are granted three financial upgradations under Modified Assured Career Progression (MACP) Scheme in the next immediate Grade Pay hierarchy as per CCS(Revised Pay) Rules, 2008 on completion of 10, 20 and 30 years of regular service.

There have been instances where Tribunals and High Courts have directed to grant benefits under Modified Assured Career Progression (MACP) Scheme in the promotional hierarchy. However, in such cases, the order of Court is specific to the applicant only.

This was stated by the Minister of State in the Ministry of Personnel, Public Grievances and Pensions and Minister of State in the Prime Minister’s Office Dr. Jitendra Singh in a written reply to a question by Shri Kamlesh Paswan in the Lok Sabha today.

Source: http://90paisa.blogspot.in/2015/12/macp-on-promotional-hierarchy-written.html?m=1

Is attendance compulsory for CG employees on the implementation day (01.01.2016) of the 7th CPC recommendations

Central Government employees are wondering if there will be any consequences of taking leave on January 1, 2016, the date of implementation of the 7th Pay Commission report.

The recommendations of the 7th Pay Commission regarding the salaries and perks for the Central Government employees will come into effect from January 1, 2016 onwards. Many are curious to find out the connection between the date of implementation of 7th CPC and reporting to work on the day.

Normally, the date of joining work, date of getting the promotion, date of receiving the increments, transfer date, and retirement dates are very important for a Central Government employee. In the average service period of a Central Government employee, he/she is likely to witness two or three Pay Commissions. Keeping this in mind, it would be better to not absent oneself on January 1, 2016.

“All Central Government employees are advised to report to work on January 1, 2016 (Friday).”

“This is especially so for those who are on long leave. It will help them avoid a lot of problems in future.”

“If 01.01.2016 is announced as a holiday, it will be better to report to work the next day.”

If the recommendations of the 7th Pay Commission are going to be implemented from 01.01.2016 onwards, then the employees will have to come to work that day to accept these recommendations. If he/she is absent on the day, then the day they return to work will be treated as the day they had accepted the new recommendations.

If an employee not to report on the date of implementation of recommendations of new pay commission, this could delay the benefits of the 7th Pay Commission. This could also cause financial losses too due to pay revision as per the recommendations of new pay commission.

According to rules, in order to qualify for the annual increment, an employee has completed 6 months or more in the revised pay structure as per 6th CPC, as on 1st July. A delay of even a single day could deny you an increment, as per the rule.

It is not easy to calculate the date of promotion for Central Government employees. Normally, promotions are granted with retrospective effect. Let us assume that the promotion was given with effect from 01.01.2016. Not reporting to work on that day could cause a number of problems.

Since the government rules are bound to be changed arbitrarily, one can never be sure of the kind of troubles it could cause them. Therefore, it is better to go to work on 01.01.2016.

The recommendations of the 6th Pay Commission were implemented on 01.01.2006, a Sunday. Therefore, the next day was taken as the assumption date. One might remember that the government had issued another order to avoid the confusions that resulted due to this. (click here to view the order)

Even those who are on long leave for any particular reason are advised to report to work on January 1, 2016 at least and then continue with their leave. This will help them avoid a lot of problems.

Source:http://7thpaycommissionnews.in/is-attendance-compulsory-for-cg-employees-on-the-implementation-day-01-01-2016-of-the-7th-cpc-recommendations/

Minimum Pensions

The minimum pension fixed for retired Central Government employees is Rs. 3,500/- per month with effect from 01.01.2006. For pensioners, including those retired from public sector corporations and other establishments, to whom the Employees’ Pension Scheme (EPS), 1995 framed under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 applies, provision of a minimum pension of Rs. 1,000/- per month has made with effect from 01.09.2014.

The Sixth Central Pay Commission had recommended pension of Rs. 3,330/- per month in respect of employees retired from the Central Government. The minimum pension of Rs. 1,000/- per month under the EPS, 1995 implemented by the Central Government was one of the recommendations of the Expert Committee constituted by the Government. Apart from this, the Committee on Petitions of the Rajya Sabha under the chairmanship of Shri Bhagat Singh Koshiyari in its 147th Report had recommended to increase Government share of contribution under EPS, 1995 from 1.16 per cent to 8.33 per cent to support the minimum pension level of Rs. 3000/- per month. However, it was not found feasible for implementation.

No complaints regarding anomalies in minimum pension in respect of Central Government employees have been received by the Government.

However, representations, grievances and complaints have been received from various quarters that the monthly pension to pensioners under EPS, 1995 have not increased to Rs. 1,000/- per month even after the notification in respect of pensioners who had taken short service pension, commutations or return of capital. Some grievances also relate to the fact that pension has not increased for those drawing more than Rs. 1,000/- per month.

Consequent upon implementation of the minimum pension to pensioners under EPS, 1995 vide notification number GSR 593(E) dated 19.08.2014, the pension of all member/widow(er)/disabled/ nominee/dependent parent pensioners whose original pension was less than Rs. 1,000/- per month had been fixed at the minimum of Rs. 1,000/- per month. In cases where members had preferred option for Commutation, Return of Capital and Short Service Pension and have already availed these benefits as per choice exercised by them at the time of making pension claim, the deductions on account of these options would continue to apply on the minimum pension of Rs. 1,000/- per month that has now been fixed. In such cases, the pension amount would be less than Rs. 1,000/- per month even after implementation of the said notification.

This information was given by Shri Bandaru Dattatreya, Minister of State (IC) for Ministry Labour and Employment, in reply to a question in Lok Sabha today.

Source:http://www.pib.nic.in/newsite/erelease.aspx?relid=0

Measures to Promote Yoga WordWide

Under Central Sector Scheme of International Cooperation(IC), the Ministry of AYUSH undertakes measures for global promotion and popularization of AYUSH systems of Medicine including Yoga. The Ministry deputes Yoga experts to participate in fairs/ workshops organized by the Ministry of Tourism, Ministry of External Affairs, Ministry of Culture, Ministry of Commerce, etc. and Indian Missions abroad for Yoga demonstration and lectures. The Ministry of AYUSH had in collaboration with Indian Council for Cultural Relations (ICCR) deputed Yoga teachers to Indian Missions for a period of 7 days by revising IC Scheme to train Yoga enthusiasts for their participation in the Mass Yoga Demonstration organized by various Indian Missions abroad to celebrate the first International Day of Yoga.

Separately, Ministry of External Affairs (MEA) under auspices of Indian Council for Cultural Relations (ICCR) also deputes Yoga teachers to Indian Missions for imparting training to local students and teachers. MEA also provides publicity material including videos, documentaries, coffee table books, instructional manuals on the different aspects of yoga and yogic practices to Indian Missions for display and distribution. MEA also has been building partnerships with local organisations like Art of Living Global Centre, Gayatri Parivar, Isha Foundation Global, Iyengar Yoga Foundation, etc. that have been instrumental in spreading knowledge about yoga in different parts of the world.

The ICCR has recently signed an MoU with Yunnan Minzu University, China for establishment of Yoga College named “India-China College of Yoga”. The part support for this initiative has been provided by the Ministry of AYUSH.

This information was given by the Minister of State (Independent Charge) for AYUSH, Shri Shripad Yesso Naik in a written reply in Rajya Sabha today.

Source:http://www.pib.nic.in/newsite/erelease.aspx?relid=0

7th pay panel: The silver edge

The Report of the Seventh Central Pay Commission has received a mixed response, as expected. All eyes are now on the Government’s decisions regarding the acceptance, or otherwise, of its recommendations which will be taken after observing a due process.

Among the responses that have found traction are that Pay Commissions should be institutionalised and   they should submit their recommendations on a regular basis, in tandem with Administrative Reforms Commissions. The present practice of having two separate exercises, with no link between them, takes away, substantially, the potential of their improving governance in a truly meaningful sense. The experience of the Sixth Pay Commission and the Second Administrative Reforms Commission underscores the point. It is hoped that cognizance will be taken of this basic imperative.

In  this context, the more widely discussed aspects of policy change   have   been  associated  with  restructuring and  rightsizing the administrative  apparatus,  building incentives for good performance, disincentives  for  under-performance and non-performance and ensuring top-notch service delivery to citizens imbued  with transparency, integrity and accountability. Their intrinsic importance cannot be gainsaid. 

Having said that, it may be useful to retrain the analytic lens for a bit and  move our attention to a  barely acknowledged resource embodied in pensioners and  how they can be taken on board as partners in the Government’s development and governance enhancement endeavours. Here it is  important  to  note  that  the resource cuts  across different Services and  different  levels  and  is  not  confined  to  the  creamy  layers, which have, over a period of  time, taken care of their interests reasonably well. In fact, this was alluded to recently in Parliament during discussions on amendment to the Prevention of Corruption Act.

The silver edge, now in focus, which the Government can gainfully endow itself with has to do with the “aam” pensioner as distinct from the “khaas” pensioner alluded to above.

To  fit  it  into an appropriate  framework , the  relevant Chapter 10 of the Seventh Pay Commission Report  may be referred to. According to the figures available, there were, on 1.1.2014, 51.96 lakh pensioners, including all categories of civil and defence pensioners. This figure is higher than that of serving employees. According to an age analysis, pensioners in the age group of 60-70 years are 37.21%. The percentage figures for 70-80 years, 80-90 years and 90-100 years pensioners are 25.48%, 8.88% and 2.25%, respectively. Among the defence pensioners 57% are below 60 years of age.

There are robust policies in place for the defence personnel, who may be discharged from service at a younger age , compared to their civilian counterparts. The existing structure we have is the Department of Pension and Pensioners Welfare   which was set up in 1985.  

It is this Department which is best placed to take the lead in initiating  policy  changes  for civilian  pensioners who are in the age bracket of 60-70 years, who  are deemed  fit and  who  may  be willing  to continue a meaningful association with the Government. To clarify,  the objective  would  be  to get the best from this group for the Government  itself  and  not  serve  as  a  mere   stepping  stone  or  placement  agency  to  cater  to  the  corporate  and  non- governmental  sectors. 

For  starters, a thorough needs and gap analysis may be taken up, Ministry-wise, to  delineate  the  areas  where it may  be  fruitful  to  tie up with pensioners. With so many  posts lying vacant  and the delays of fresh recruitment, it  makes eminent  sense  to  have  pensioners  do  some  hand  holding.

It  would be strategically  important,  at  this  juncture, to  take  up  the  task  of a significant   policy recast which may be time consuming but will pay rich dividends.

Source:https://bureaucracytoday.com/top_news.aspx?id=143767

Call for removing discrepancies in pension scheme

Shivagopal Mishra, secretary of All India Railwaymen’s Federation, said on Saturday that the federation wanted the Union government to correct the shortcomings in the pension scheme and discrepancies in the recommendations of the Seventh Pay Commission for railway employees.

It was also opposed to any move to privatise Railways, he said.

Addressing presspersons here, Mr. Mishra said that there were nearly 2.5 lakh vacancies in Railways. Nearly 80 per cent of these vacancies were in the safety department.

This had led to an increase in work load of the existing employees.

Meanwhile, the government was taking steps to privatise railways, which was detrimental.

Already, Railways had reached an agreement with some multinational companies to manufacture railway locomotive engines.

Since there were a lot of drawbacks in the new pension scheme, the government should carry on with the old pension scheme. This should also be applicable to all those employees who joined the railways department since January 1, 2004. The discrepancies in the Seventh Pay Commission should be set right, he said.

If the Union government did not fulfill these demands by February 15, 2016, the Federation would have no other alternative but to resort to strike from the first week of March, Mr. Mishra said.

Anthony D’Cruz, General Secretary of South West Railway Mazdoor Union, Venu P. Nair, National Railway Mazdoor Union, were present.

Source:http://www.thehindu.com/todays-paper/tp-national/tp-karnataka/call-for-removing-discrepancies-in-pension-scheme/article8010287.ece

Lok Sabha passes Bonus Bill; benefits to accrue from April 2014

The Lok Sabha on Tuesday passed a bill allowing doubling of wage ceiling for calculating bonus to Rs 7,000 per month for factory workers with establishments with 20 or more workers, with the benefits being applicable retrospectively from April 2014.

The Payment of Bonus (Amendment) Bill, 2015, was passed by a voice vote, with some members objecting to the raising of eligibility limit for payment of bonus from a salary of Rs 10,000 per month to Rs 21,000.

Replying to a debate on the legislation, Labour Minister Bandaru Dattatreya said the Government has ensured that the interest of workers are protected and there is no infringement on their rights.

"Because of Bihar Elections this bill got delayed... The Prime Minister spoke to me and asked why should the benefits of this Act should accrue to workers from 2015. It should be made available from the April 2014," he said while moving an official amendment to the Bill.

The official amendment provides that the benefits of the Act would be deemed to have come into force on April 1, 2014, instead of April 1, 2015. Dattatreya said the Ministry has held 21 tripartite meetings with all central trade unions while arriving at a decision.

The Bill provides for enhancing monthly bonus calculation ceiling to Rs 7,000 per month from the existing Rs 3,500. It also seeks to enhance the eligibility limit for payment of bonus from Rs 10,000 per month to Rs 21,000 per month.

"The Government's paramount intention is to safeguard the interest of workers... There is no infringement of workers' rights and whatever the government does will be in the interest of workers," Dattatreya said.

After the bill was passed, Deputy Speaker M Thambidurai, who was in the Chair, said the government should be congratulated for bringing the measure as also for effecting the benefits retrospectively.

Terming the legislation as historic, Dattatreya said the outgo from government coffers would be about Rs 6,203 crore.

The Minister said the Bill would benefit crores of organised sector worker. He said unorganised sector constitute 93 per cent of the workforce or about 40 crore people.

Participating in the discussion, Mumtaz Sanghamita (TMC) said "it will benefit vast majority of poor workers. Bonus is the thing which is extra and over regular pay". She, however, wanted to know whether the increase in ceiling was commensurate to the inflation rate.

M Srinivas Rao (TDP) observed that labour laws in India were very weak and government should ensure safety and security for workers.

K Visheweshwar Reddy (TRS) said the sharp cut off of Rs 21,000 per month was flawed and added that contractual workers in factories are overworked and underpaid.

Sankar Prasad Datta (CPI-M) too echoed similar views saying that Rs 21,000 per month ceiling should not be there. Jaiprakash Narayan Yadav (SP) said there should be a special provision for women workers while providing bonus.

Prahlad Singh Patel (BJP) asked the government to fix a minimum ceiling and not the maximum one. "We can also think of linking it with the Pay Commission, so that we do not have to come again and again to Parliament to make changes". He said bonus should not be linked to profit or losses.

The Payment of Bonus Act, 1965, is applicable to every factory and other establishment in which 20 or more persons are employed on any day during an accounting year. The last amendment to the eligibility limit and the calculation ceiling was carried out in 2007 and made effective from April 1, 2006.

This amendment in the Act to increase wage ceiling and bonus calculation ceiling was one of the assurances given by the Centre after 10 day central trade unions went on one-day strike on September 2.

Source:http://www.dnaindia.com/money/report-lok-sabha-passes-bonus-bill-benefits-to-accrue-from-april-2014-2158631

eNPS- Open new Account Online or contribute to NPS account Online

eNPS - Open new Account Online or contribute to NPS account Online

NPS Trust welcomes you to 'eNPS' ,which will facilitate:-

➤  Opening of Individual Pension Account under NPS (only Tier I / Tier I & Tier II)

➤  Making initial and subsequent contribution to your Tier I as well as Tier II account

For Account opening, you need to:

✔  Have a PAN Card, mobile number, email ID and an active bank account with enabled net baking facility

✔  Fill up all the mandatory details online

✔  Scan and upload your photograph and signature

✔  Make online payment (Minimum amount of Rs 500)

✔  Print the form, paste photograph & affix signature and submit the Form to CRA

Kindly note that the eNPS facility cannot be used for enrolment under Atal Pension Yojana (APY)

NPS Online
Open/contribute to NPS account Online

To open an Individual Pension account online.

✔  You must have a 'Permanent Account Number' (PAN) and a Bank account with any of the registered Point of Presence empanelled for KYC verification for subscriber registration through NPS

✔  Your KYC Verification in NPS will be done by your Bank selected by you during the registration process.

✔  You need to upload your scanned photograph and signature in *.jpeg/*.jpg format having file size between 4kb - 12kb.

✔  You will be routed to a payment gateway for making the payment towards your NPS account from Debit / Credit card or Internet Banking.

After successful payment of initial contribution, a Permanent Retirement Account Number (PRAN) will be allotted to you. After online account opening process is completed,

➤  The PRAN Kit containing a PRAN Card, IPIN/TPIN, Subscriber Master Report, Scheme Information Booklet alongwith a Welcome Letter will be sent to your registered address.

➤  You need to take a printout of the form, paste your photograph (please do not sign across the photograph) & affix signature.

➤  You should sign on the block provided for signature.

➤  The photograph should not be stapled or clipped to the form.

➤  The form should be sent within 90 days from the date of allotment of PRAN to CRA at the following address or else the PRAN will be ‘frozen’ temporarily:

Central Recordkeeping Agency (eNPS)

NSDL e-Governance Infrastructure Limited,

1st Floor, Times Tower,

Kamala Mills Compound, Senapati Bapat Marg,

Lower Parel, Mumbai - 400 013

Please note that registration for APY cannot be done through www.enps.nsdl.com. For registration under APY please contact your Bank Branch.

Processing of subsequent contribution:

All existing subscribers (registered through both online and offline mode) can contribute in Tier I & Tier II account using ‘eNPS’. To contribute online, you need to

✔  Have an active Tier I / Tier II account

✔  Authenticate your PRAN using the OTP sent to your registered mobile number

✔  Pay through your Debit / Credit card or use Internet Banking option.

For queries please contact : 022 - 4090 4242 or write to: eNPS@nsdl.co.in

Read more: http://www.staffnews.in/2015/12/enps-open-new-account-online-or.html#ixzz3u7PgF0nm
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7th CPC implementation can happen by middle of 2016 and not be pushed out too late: Rakesh Arora

The seventh pay commission, headed by Justice AK Mathur, last month submitted its report to Finance Minister Arun Jaitley. The recommendations, once cleared by the Cabinet, will lead to a hike in salaries of central government employees and pensioners with effect from January 1, 2016.

However, there is no certainty that it would happen even in the next six months, according to Rakesh Arora, managing director and head of research, Macquarie India.

“And still there is no guarantee that it is going to be implemented in the next six months, it is still for the government to really consider.

“So what we are saying is from the timing it can happen by middle of 2016 and not be pushed out too late.”

The financial burden of the 7th Finance Commission recommendations is huge but the government has planned to cushion its impact by opting for its implementation in stages and not at one go.

The strategy involves pushing back the date of implementation of the pay commission award so that the government saves on payment of allowances. The headline financial impact figures that the commission gave while making its recommendations are enough to unnerve anyone. The recommendations, if implemented fully, are expected to increase the total spending by the government on salary and pensions by a whopping Rs 1.02 lakh crore.

The strategy that the government is working on is aimed at limiting the increase in salary payout to Rs 55,000 crore for the next financial year beginning mid- 2016.

The pay panel has said that the salary increase, as per the recommendations, should be applicable from January next year. If the report is implemented from a later date, the government will have to pay only salary arrears for the previous months. In effect, these arrears will not include allowances.

The burden of enhanced allowances is expected to be Rs 29,300 crore annually. The other component of the government’s cushioning plan is to roll over some payments to financial year 2017-18.

Of the total additional burden of salary and allowances stemming from implementation of pay commission’s recommendations, around 28 per cent will be borne by the Railways from its own resources. For servicing a higher pension payout, the burden on the general budget will be Rs 33,700 crore. The overall salary and pension bill for the central government, excluding railways, is expected to be Rs 1.88 lakh crore this fiscal.

Of the total, around Rs 88,000 crore will be on pensions only. In the next financial year, the total outgo is expected to be higher at Rs 2.4 lakh crore.

The government has said that, despite the pay panel burden, it would stick to the target of bringing down the fiscal deficit to 3.5 per cent of the gross domestic product in 2016-17 from 3.9 per cent in this financial year.

According to estimates, the burden of the pay panel recommendations will be equivalent to 0.4 per cent of the gross domestic product in 2016-17.

So to keep the deficit within the target, the government may be forced to prune expenditure and aim for higher non-tax revenues from streams such as disinvestment or auction of natural resources.

Source: NDTV

7th Pay Panel bonanza: Boon or bane?

On November 19 when Justice AK Mathur submitted the 900-page Seventh Pay Commission report to Finance Minister Arun Jaitley there were smiles on the face of 48 lakh Central Government employees and 55 lakh pensioners. However, amid all the ecstasy and celebrations, economists are divided in their opinion over the impact of an additional Rs 1.02 lakh crore burden on India’s economy at a time when the Government is struggling to cut its fiscal deficit. So will the 7th Pay Panel report be a boon for the BJP-led NDA-II Government or the move will boomerang on it like the “India Shining” campaign of the NDA-I regime? Bureaucracy Today analyses the issue.

The proposed 23.55 percent hike in the salaries and pensions of Central Government employees has alarmed a section of economists, ratings agencies and brokerages which warn of a dent in India’s finances though the other section and the Government express confidence that the fiscal deficit targets will not be breached.

The Commission has proposed a new pay matrix, replacing the existing pay bands and grade pay, for the Central Government employees and pensioners, with a monthly starting pay, inclusive of dearness allowance (DA), of Rs 18,000 and an apex level pay of Rs 2.5 lakhs. The starting pay now is Rs 7,000 per month and the highest salary is Rs 90,000 (fixed) excluding the DA which is 119% at present.

IMPACT ON FISCAL DEFICIT

Ratings agency Fitch says the recommendations, “if implemented in toto, could challenge the Government’s goal of achieving a fiscal deficit of 3.5 percent in 2016-17 unless its expenditure is cut or revenue raised”. Similarly, another international ratings agency, Standard & Poor’s, opines that the implementation of the Pay Panel proposals will “put pressure on the fiscal position of the Government and will act as a constraint to sticking to the roadmap for fiscal consolidation”.

However, former Reserve Bank of India Governor Bimal Jalan feels otherwise. “I don’t think the implementation of the Seventh Pay Commission recommendations will negatively impact the Government’s fiscal deficit. With the increase in employees’ income, consumption will also increase. If the consumption increases, the Government will earn more from Excise Tax, GST, etc. An increase in consumption will lead to an increase in Government revenue,” he tells Bureaucracy Today.

Echoing Jalan’s views, former Revenue Secretary Sunil Mitra says, “Our fiscal deficit is very much in control. Whether the implementation of the Pay Panel recommendations will impact the fiscal negatively, I cannot say. It may not really impact the fiscal deficit because the macro-economic fundamentals in the country are very good at the moment. Other than inflation in some food items, generally the prices are down.”

Earlier in February this year, Finance Minister Arun Jaitley had set the fiscal deficit target for the FY 2015-16 at 3.9 percent of the gross domestic product and said the Government would reduce the target gradually to 3 percent by FY 2017-18.

Brokerage firm Citigroup warns that in the backdrop of the Pay Panel recommendations, the Government might have to “make a cut in public investments” to achieve its fiscal deficit target, offsetting “the gains on economic activity somewhat”.

“The fiscal impact of the Seventh Pay Commission report, as with the previous ones, is likely to be felt over the next two years: 2016-17 and 2017-18,” says Sonal Varma of Nomura, a broking firm, in a research paper.

Seeking to allay the fears, Economic Affairs Secretary Shaktikanta Das says, “The Commission’s report was expected and the Government knew that it would take effect from January 1, 2016. Obviously the Government was not aware of its thinking. But the Government always has a broad estimation of what is going to be the impact of Pay Commission recommendations and accordingly internally a kind of risk matrix is prepared. The Government will deal with the situation. We will work out our numbers. So far as the fiscal consolidation roadmap is concerned, that will be maintained.”

Finance Secretary Rattan Wattal tells Bureaucracy Today, “While there is fear of some revenue shortfall, especially on the direct taxes front, the Government does not want to go in for any expenditure cuts to meet the deficit target. The FY16 plan spending target is realistic and reasonable.”

MORE BURDEN ON PUBLIC?

Though the Government is assuring the nation that the Pay Panel report will not affect the Indian economy, some experts argue that the State exchequer might have to shell out more with the Government likely to impose new taxes to meet its expenditure.

G Chokkalingam, Founder and Managing Director of the Mumbai-based Equinomics Research and Advisory, opines, “The additional income in the hands of Central Government employees will constitute about 0.5 per cent of a projected GDP in FY17 and may not give any boost to consumer goods manufacturers as a major part of this would be chucked away from them by revival in inflation rates and further higher duties (on fuels as long as the oil price remains subdued) and taxes (especially on services) likely to be imposed by the Government to meet its growing expenditure needs.”

However, Bimal Jalan seeks to disagree. “I don’t think that the public has to pay more taxes to meet the expenditure requirement. The impact of the Seventh Pay Panel report on the budget will not be substantial. I would not worry about that part. It is reasonable and can be handled,” the former RBI Governor told Bureaucracy Today.

Madan Sabnavis, Chief Economist of ratings agency CARE, says though the quantum of the recommended increase in the salaries and pensions of the Government employees is justified, the amount is quite large and “absorbing Rs 1 lakh crore is a big task”.

PRESSURE ON STATES

The impact of the SCPC recommendations in all its likelihood will trigger a similar demand in the States, a fact acknowledged even by Jaitley. The Union Finance Minister admitted at a business summit in Jaipur recently that the implementation of the 7th Pay Commission recommendations will put “slight” burden on the States’ expenditure.

Former Revenue Secretary Mitra also opines that though there will be pressure on the State Governments, it won’t be huge. “The State finances are much better than those of the Central Government. I don’t anticipate that SCPC recommendations will have a huge pressure on public finance or for that matter State finances. Most State Governments have improved their finances and are better placed than the Centre on the fiscal front,” Mitra tells Bureaucracy Today.

Echoing his views, Jalan articulates that the SCPC would significantly boost the Centre’s income tax collections which will also benefit the States as the Centre’s gross tax revenue needs to be shared with them.

However, Niti Aayog Member Bibek Debroy vehemently disagrees. “The repercussions of implementing the Seventh Pay Panel report will be serious on the States’ fragile finances. When starved of funds, the State Governments slash capital expenditure and the Pay Panel report will force the States to scale back their development spend,” Debroy tells Bureaucracy Today.

He also says the Railways, which is already reeling under financial constraints, will also suffer as the wages of its staff go up. Of the total Rs 1.02 lakh crore revised salary, the Union Budget will bear Rs 74,000 crore while Rs 28,000 crore will be borne by the Rail Budget.

Debroy’s apprehensions are not unfounded. “Most of the States are working around the 3% fiscal deficit number. Accommodating the additional pay increase would be a touch and go. A few weeks ago the Central Government put forward the Ujwal Discom Assurance Yojana (UDAY) under which the States are to restructure their debt-ridden Electricity Boards (SEBs). This means bearing some additional debt in the next two years. Depending on the timing of their Pay Committee recommendations, if any, the State Governments will have a sticker path to cross as they would have to address the necessity of higher salaries and the option of reforming the SEBs along with other pressures like spending partly on setting up Smart Cities and launching other programmes,” Madan Sabnavis says.

FUTURE UNCERTAIN

Though the Central Government has set up a “cell” to examine the Pay Panel recommendations, ambiguity remains as to how the Government will bring the Rs one lakh crore money to fund the increased salaries. The challenges are at multiple levels and very little has been said in the report about addressing them. The additional expenditure has to be compensated from somewhere. To fulfil the Fiscal Responsibility and Budget Management objective, the Government either has to increase its revenue or cut down its expenditure and this is where the problem lies. It will be a major challenge for the Finance Minister when he presents the FY2016-17 budget in Parliament. It is just a matter of few months before we know how well the Government has worked on its fiscal arithmetic. For the time being, let us hope that the Government does not further bend the back of the common man who is already facing the heat of spiralling prices.

Source: bureaucracytoday.com

Proposed future of the DOP as projected by AIAPC and handed over to the Member (P)

Courtesy: Postmastercadre.blogspot.in