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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.
As of May 29, 2020, there are 1,65,799 confirmed cases of COVID-19 in India. 47,352 new cases have been registered in the last week (since May 22). Out of the confirmed cases so far, 71,106 patients have been cured/discharged and 4,706 have died. Most cases are in the state of Maharashtra (59,546) followed by the states of Tamil Nadu (19,372), Delhi (16,281) and Gujarat (15,562).
With the spread of COVID-19, the central government initially undertook many measures to contain the spread of the pandemic, including restrictions on travel and movement through national lockdown. With gradual resumption of activities, the central government has recently announced measures to ease restrictions on travel and movement. Further, the government has continued to announce policy decisions to ease the financial stress caused by the pandemic, and to contain further spread of the pandemic. In this blog post, we summarise some of the key measures taken by the central government in this regard between May 23 and May 29, 2020.
Figure 1: Day wise number of COVID-19 cases in the country
Source: Ministry of Health and Family Welfare; PRS.
Finance
RBI announces additional measures to ease financial stress caused by COVID-19
On May 22, the Reserve Bank of India (RBI) issued a statement with various development and regulatory policies to ease the financial stress caused by COVID-19. These measures include: (i) improving liquidity in the market; (ii) support to exports and imports; and (iii) easing capital financing. Subsequently, following measures have been notified by the RBI:
Travel and Movement
Domestic Air travel resumes; fare limits set by government
Domestic passenger air travel has been resumed in a phased manned (with one-third capacity of operations) from May 25, 2020 based on the announcement of the Ministry of Civil Aviation on May 21. To ensure that airlines do not charge excessive fare and to ensure that journey is only for essential purposes, the Ministry of Civil Aviation issued an order to limit the minimum and maximum fare that airlines can charge from the passenger. The routes have been divided in seven sectors based on the approximate duration of the flight. For routes with shortest duration (for example, Delhi to Chandigarh), the minimum and maximum fare will be Rs 2,000 and Rs 6,000, respectively. For routes with the longest duration (for example, Delhi to Thiruvananthapuram), the minimum and maximum fare will be Rs 6,500 and Rs 18,600, respectively.
Further, the Ministry announced that all operational routes under the Regional Connectivity (UDAN) Scheme with up to 500 km of length or operational routes in priority areas (North East region, hilly states or islands) are permitted to resume operations. This is in addition to the one-third capacity of operations announced earlier.
Health
Guidelines for international arrivals issued
The Ministry of Health and Family Welfare issued guidelines for international arrivals. All travellers are required to give an undertaking that they will undergo a 14-day mandatory institutional quarantine at their own cost (7 days in institutional quarantine followed by a 7-day isolation at home). In emergency cases (such as pregnancy or death in the family), home quarantine will be permitted. Use of Aarogya Setu app will be mandatory in such cases. Only asymptomatic passengers will be allowed to board (flight/ship) after thermal screening. On arrival, thermal screening will be carried out for all passengers. The passengers found to be symptomatic will be isolated and taken to a medical facility.
Movement of migrant labourers
Supreme Court gives an interim order regarding problems of migrant labourers
The Supreme Court of India took cognisance of the problems of migrant labourers who have been stranded in different parts of the country. In its order, the Court observed that there are lapses being noticed in the process of registration, transportation and in providing food and shelter to the migrant workers. In view of these difficulties, the Court issued the following interim directions:
The Court directed the central and state governments to produce record of all necessary details such as the number of migrant workers, the plan to transport them to their destination, and the mechanism of registration.
Other measures
PM CARES Fund included in the list of CSR eligible activities
The Ministry of Corporate Affairs notified the inclusion of PM CARES fund in the list of activities eligible for Corporate Social Responsibility (CSR) under the Companies Act, 2013. Under the Act, companies with net worth, turnover or profits above a specified amount are required to spend 2% of their average net profits in the last three financial years towards CSR activities. This measure will come into effect retrospectively from March 28, 2020, when the fund was setup.
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
