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The Union Cabinet approved the implementation of Seventh Pay Commission recommendations yesterday. The Commission was tasked with reviewing and proposing changes to the pay, pension and efficiency of government employees. These recommendations will apply to 33 lakh central government employees, in addition to 14 lakh armed forces personnel and 52 lakh pensioners. This will take effect from January 1, 2016.
Pay, Allowances and Pension of central government employees In relation to an employee, the Commission proposed to increase (i) the minimum salary to Rs 18,000 per month, and (ii) the maximum salary to Rs 2,50,000 per month. It also recommended moving away from the existing system of pay bands and grade pay, which is used to determine an employee’s salary. Instead, it proposed a new pay matrix which will take into account the hierarchy of employees, and their pay progression during the course of employment. The Commission also suggested that this matrix should be reviewed periodically, with a frequency of less than 10 years. The Pay Commission also suggested a linkage between performance and remuneration of an employee. For this, it proposed the introduction of performance related pay which will be based on an annual appraisal of the employee. In addition, it recommended that annual increments of an employee should be withheld, if he is unable to meet the benchmark required for regular promotion or career progression. The Commission also sought to abolish or merge some of the allowances that may be given to employees by various government departments. It suggested that, of the 196 allowances that exist, 52 should be abolished and 36 should either be merged under existing heads, or be included under proposed allowances. Some of these allowances involved payment of a meagre amount of close to Rs 100 per month. In addition, the rates of House Rent Allowance (HRA) were revised. The Commission proposed a methodology to increase the HRA rates every time the Dearness Allowance given to employees increased to 50% or 100%. Dearness Allowance is given to employees in lieu of increases in the cost of living, on account of inflation. The Commission had also proposed a new methodology for computing pension for pensioners who retired before January 1, 2016. This is aimed at bringing parity between past and current pensioners. As part of the new methodology, two options for calculation of pension have been prescribed, and the pensioner may opt for either one. Financial Impact on the government
The implementation of the Seventh Pay Commission recommendations is expected to cost the government Rs 1,02,100 crore. Of this amount, 72% will be borne by the central government, and 28% by the railways. As a result, the overall expenditure is expected to increase by 23.6%, with a 16% increase in expenses on pay, 63% in allowances and 24% in pension. Addressing the issue of vacancy
As of 2014, the central government had a job vacancy of 18.5%.[i] These vacancies may need to be filled or abolished, if required, to reduce redundancy.[ii] It may be noted that the Second Administrative Reforms Commission had observed that reducing the number of government employees is necessary for modern and professional governance. Further, it had expressed concern that the increasing expenditure on salaries of government employees may be at the cost of investment in priority areas such as infrastructure development and poverty alleviation.[iii] Inducting specialised personnel in the government The Second Administrative Reforms Commission had also observed that some senior positions in the central government require specific skill sets (including technical and administrative know-how).[iii] One way of developing these skill-sets is to recruit personnel directly into these departments so that they can over a period of time develop the required skills. For example, personnel from the Central Engineering Service (Roads) may aspire and be qualified to hold senior positions in the Ministry of Road, Transport and Highways or a body like the National Highways Authority of India. However, another view is that special skill-sets may be inducted in the government through lateral entry of experts from outside government. This will allow for widening of the pool of candidates and greater competition for these positions.[iii] The Second Administrative Reforms Commission had also recommended that senior positions in the government should be open to all services. The last Pay Commission’s recommendations, in 2008, led to an increased demand in the automobile, consumer products and real estate related sectors. With the Seventh Pay Commission’s recommendations expected to take effect from January 1, 2016, their impact on the economy and the consumer market will become known in due course of time. [i] Report of the Seventh Central Pay Commission, Ministry of Finance, 2015 http://finmin.nic.in/7cpc/7cpc_report_eng.pdf. [ii] “Union govt has 729,000 vacancies: report”, Live Mint, November 30, 2015, http://www.livemint.com/Home-Page/X6U6xFe5oR2pW4simMmAhK/Union-govt-has-729000-vacancies-report.html. [iii] 10th and 13th Reports of the Second Administrative Reforms Commission, 2008 and 2009.
Recently the Chairman of Rajya Sabha issued a direction to extend the sitting hours and change the timing of Question Hour in the Upper House. Beginning with the Winter Session, which starts on November 24, Rajya Sabha will meet from 11 am to 6 pm, an hour more than its typical sitting hours. Question Hour will be scheduled from 12 pm to 1 pm, which was earlier held in the first hour of meeting. Members of Parliament (MPs), in addition to their legislative capacity, play an important role to keep the government accountable. One mechanism for them to hold the government responsible for its policies and actions is Question Hour in Parliament. During Question Hour, MPs raise questions to Ministers on various policy matters and decisions. Currently, all MPs can submit up to ten questions for every day that Parliament is in Session. Of these, 250 Questions are picked up by a random ballot to be answered each day that Parliament meets. While 230 Questions are answered in writing by Ministries, 20 Questions are scheduled to be answered orally by Ministers on the floor of the House. When a Question is answered orally by a Minister, MPs are also able to ask him/her two Supplementary Questions as a follow up to the response given. Therefore the proper functioning of Question Hour allows Parliament to be effective in its accountability function. Over the years Question Hour has become a major casualty to disruptions in Parliament. The last decade has seen a decline in the number of questions answered orally on the floor of the House. Rajya Sabha had tried to address this problem in 2011, when Question Hour was shifted to be held from 2 pm to 3 pm, but this was discontinued within a few days. The 2014 Budget Session saw both Houses of Parliament work for over hundred percent of their scheduled sitting time. However, while Question Hour functioned for 87% of its scheduled time in Lok Sabha, it functioned for only 40% of its scheduled time in Rajya Sabha. In 13 of the 27 sittings of the 2014 Budget Session, Question Hour in Rajya Sabha was adjourned within a few minutes due to disruptions. It was as a result of these increasing disruptions in the Upper House that the change in timing of the Question Hour and extension of its hours of sitting were proposed. While the Rules of Procedures of Rajya Sabha designate the first hour of sitting for Question Hour, they also allow the Chairman of the House to direct otherwise. It is using this Rule that the Chairman of Rajya Sabha, Mr. Hamid Ansari, issued directions for the Question Hour to be shifted to noon. It now remains to be seen whether this change in timing of Question Hour in the Upper House will be sufficient to allow for its smoother functioning. Sources: M.N. Kaul and S.L. Shakdher, Practice and Procedure of Parliament, Lok Sabha Secretariat, 6th Edition, 2009 Rajya Sabha Rules of Procedure, Rajya Sabha Secretariat, 2010