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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.
Elections to the 13th Legislative Assembly of Gujarat are scheduled to be held in two phases on the 13th and 17th of December. The BJP has been the dominant majority party in the Assembly since 1995. The 2002 elections saw the largest victory for the party, winning 127 seats. The Congress last held power in Gujarat in 1985. In the Assembly elections held for the the seventh Assembly, the Congress had a clear majority of 149 seats. In 1990, the Janata Dal emerged as the largest party with 70 seats. The BJP registered major gains in 1990, improving their tally of 11 seats in 1985 to 67 seats. The Congress came third with 33 seats. The electoral trends over the last 22 years may be viewed here. In the current Assembly, 117 of the 182 seats are held by the BJP. It is useful to look at the work done by the 12th Gujarat Assembly during its term from 2008 to 2012. Here we look at key metrics like the number of days the assembly was in session, members’ attendance, and legislative business. Performance of the Assembly During its five year term, the assembly sat for a total of 157 days – an average of 31 days each year. In comparison, the Lok Sabha sat for an average of 66 days each year during the period 2008 to 2011. In the same period the Kerala Assembly sat for an average of 50 days – highest among states - followed by Maharashtra (44). However, the Gujarat Assembly sat for more number of days than the Haryana Assembly which sat for an average of 13 days and Rajasthan (24). The average attendance among Gujarat MLAs stood at 83% for the whole term, with two members registering 100% attendance. 87 Bills were passed by the Assembly since the beginning of its term in 2008 till September 2011. Of these, 80 Bills i.e. over 90% of all Bills were passed on the same day as they were introduced. None of the Bills were referred to any Committee. In the Budget Session of 2011, 31 Bills were passed of which 21 were introduced and passed within three sitting days Amendments sought by the President and the Governor One of the significant laws passed by the 12th Assembly was the Gujarat Control of Terrorism and Organised Crime Bill, 2003 which was introduced and passed in July 2009. However the Bill did not receive the Presidents Assent and was sent back to the Gujarat Assembly for amendments. In December 2009, the assembly passed the Gujarat Local Authorities Laws (Amendment) Bill 2009 which sought to make voting compulsory in elections to local self-government bodies like municipal corporations and Panchayats. The Gujarat governor returned the Bill for reconsideration in 2010. It was re-introduced in the house in September 2010 without changes. Another Bill that was returned by the Governor was the Gujarat Regularisation of Unauthorised Development Bill which sought to regularise unauthorised construction on payment of an Impact Fee. The Bill was passed by the Assembly in March 2011. The Governor returned the Bill with a suggestion to include a provision to bar the regularisation of unauthorised construction beyond a specified date. The Bill was re-introduced and passed with amendments by the Assembly in September 2011.