Pay commissions & Impact on Force . Col Lamba

Pay Commissions & Their Impacts On Pay + Pension+ Status of Armed Forces

Degradation of Armed Forces from one pay commission to subsequent pay commissions

Pay Commission is set up intermittently by Government of India, and gives its recommendations regarding changes in salary structure of its employees. Since India's Independence, seven pay commissions have been set up on a regular basis to review and make recommendations on the work and pay structure of all civil and military divisions of the Government of India. Headquartered in Delhi, the Commission is given 18 months from date of its constitution to make its recommendations.

First Pay Commission

The first pay commission was established on January , 1946 and its submitted its report on May, 1947 to the interim government of India.
It was under the chairmanship of Srinivasa Varadachariar.

Second Pay Commission

The second pay commission was set up in August 1957, 10 years after independence and it gave its report after two years.

 The recommendations of the second pay commission had a financial impact of Rs 396 million. The chairman of the second pay commission was Jagannath Das.

The second pay commission reiterated the principle on which the salaries have to be determined. It stated that the pay structure and the working conditions of the government employee should be crafted in a way so as to ensure efficient functioning of the system by recruiting persons with a minimum qualification.

Third Pay Commission.

The third pay commission set up in April 1970 gave its report in March 1973 i.e. it took almost 3 years to submit the report, and created proposals that cost the government Rs. 1.44 billion. The chairman was Raghubir Dayal.

The third pay commission (3CPC) added three very important concepts of

 inclusiveness, comprehensibility,
and adequacy for pay structure to be sound in nature.

The third pay commission went beyond the idea of minimum subsistence that was adopted by the first pay commission. the commission report say that the true test which the government should adopt is to know whether the services are attractive and it retains the people it needs and if these persons are satisfied by that they are getting paid.

Third Pay Commission and the Armed forces.

The 3CPC was the first Pay Commission without a military member.

 Its " terms of reference" however included "examination of the structure of emoluments, the retirement benefits and terms and conditions of the Defence Forces personnel". :para 2.3.5

The Commission, established 'relativity' of Defence Forces officers and Indian Police Service(IPS) officers , whose wages till for similar years of service were less than that that of Armed Forces officers with similar years of service, noted that "the relativity" with IPS was "only a working method of devising scales of pay for the service officers which did not mean that the functional role of the two services were similar".

A)First Jolt to the Armed Forces

 The Commission,
 ambiguously "qualified this statement by mentioning that the job profile of IPS officers was the closest civilian analogue vis-à-vis infantry officers and that a working relationship did exist between the two organizations.

While establishing some sort of parity, and relativity with IPS, the Commission, without an explanation, noted
Cops jumped up. Force stagnated.

B) Second Jolt to the Armed Forces

"that the pay structure of the Indian Administrative Service with its long pay scales was particularly unsuitable for service officers",

C) Third  Jolt to the Armed Forces
Armed Forces degradation number one From At Par status to lower in ladder of status

even though the pay structures of armed forces and Indian Civil Service had been, as a matter of established practice, at par.:para 2.3.

D) Fourth Jolt to the Armed Forces.. OROP taken away

It controversially recommended that military pension be de-linked from military service conditions to conform to civil pensions.

 On the basis of the 3 CPC recommendations Indira Gandhi, Prime Minister in the Indian National Congress(INC) government,

took an "ex-parte" decision and terminated One Rank, One Pension (OROP), the basis of military pensions till then.:para 2 and10.2:p1

In 1973, the Government, implemented the following changes in pension and service conditions of the Armed Forces:
E) Fifth Jolt to the Armed Forces
 1)Increased the pension of civilians, who retired at 58, by 20 percent, from 30 to 50 percent;

 II) reduced the pension of soldier, Non Commissioned Officers (NCOs), and Junior commissioned Officers (JCOs), by 20 percent, from 70 to 50 percent of basic pay,

with the caveat that for full pension the minimum service was 33 years;

[III] an exception was made for the armed forces, the mandatory service for full pension was reduced to 25 year.

F) Sixth Jolt to the Armed Forces

But as soldiers in 1973 retired after 15 years service, at the age of 33-36, they got less than 30 percent of the pay as pension;

[G] Seventh  Jolt to the Armed Forces

soldiers pension was thus decreased not by 20 percent but 40 percent from 70 to 30 percent

Note: Babu's raised their pension from 33% to 50 %

H) Eighth  Jolt to the Armed Forces
The government in addition to down grading military pensions down graded the status of soldier by equating "infantry soldier with less than three years’ service" with a "semi-skilled/unskilled labour".

These decisions were based on the recommendation, and endorsement of K B Lall, Defence Secretary. The decision was announced two months after Field Marshal Sam Manekshaw, the victor of the 1971 war, retired from service.

The reason for depressing the armed Forces pensions given by the government was to ensure ‘equivalence’ of Armed Forces pensions with civilians.

The reduction in armed Forces pension, and down grading its status immediately following the decisive Bangladesh war, was, not unexpectedly, unpopular with the armed Forces, and has since become a cause of persistent grievance, and distrust.

 Conflating civil and military pensions, and reduction of Armed forces Pension, by the Indira Gandhi Government, has been invoked to rally Armed Forces Veterans, most recently during the OROP protests. :para 2 and 10.2

Fourth Pay Commission.

Constituted in June 1983, its report was given in three phases within four years and the financial burden to the government was Rs.12.82 billion.

 This commission has been set up on dated 18.3.1987, Gazette of India (Extra ordinary) Notification No 91 dated 18.3.1987, The chairman of fourth pay commission was P N Singhal.

Fourth Pay Commission and the Armed forces.

Indian National Congress (I) Government, headed by Rajiv Gandhi, in the wake of the 4th CPC to implemented concept of 'Rank Pay' for armed forces officer. Rank Pay affected all officers ranks from second lieutenant to brigadier in the army, and equivalent ranks in the Indian Air Force and the Indian Navy.

 The 'rank pay', which varied from 200 to 1200, was not an additional pay, but amount deducted from their pay grade.

 This ended long established Military Indian Police service equations. Police Officers, and officers from other AIS officers, with 14 years of service, who were formerly in the same pay grade as majors, with 14 years service, were equated to Brigadiers, on the basis of the new pay grades.

 Veteran say  rank pay is  “rarest of rare fraud, perjury and Injustice to the defence forces”.

He explained, "How could it be allowed that the first military rank of Second Lieutenant along with two promotional ranks of Lieutenant and Captain were all clubbed with the first civilian rank?".

 Similarly at the level of major "rank pay' had the effect of promoting civilian pay grades equal to major till the 3 CPC, to that of colonels."

The rank pay became an issue of considerable resentment in the armed forces, and cause of general distrust of the pay commissions, and the Congress  Government.

 Eventually, Maj AK Dhanapalan, a retired major, litigates 'rank Pay'. After protracted legal struggle high court, despite many appeals,in a land mark decision declares the 'rank pay' concept illegal.

 In its judgment the SC notes that the 'rank pay' was wrongly deducted from basic pay and ordered re-fixation of pay "with effect from" and not "as on" 1 January 1986.

Fifth Pay Commission.

The notification for setting up the Fifth CPC was issued on 9 April 1994, but started functioning only on 2 May 1994, with the assumption of charge by the Member Secretary.:paras 1.63 The chairman of fifth pay commission was Justice S. Ratnavel Pandian. the members were: Suresh Tendulkar, Professor Delhi school of Economics; and M.K Kaw, Indian Administrative Service.

In comparison First CPC had nine members including military members,

the second had six members including a military member,

the 3 CPC and 4 CPC had five, but no military member.

The fifth had three members, but no military member.:para 1.11

The first had no member secretary, just a secretary

 After the 1 CPC all pay commissions have had a member secretary, and invariably from the IAS.:para 1.12

The 5 CPC report, a massive tome, had nine part in 172 chapters, It took three years with a sanctioned staff 107, which ballooned into 141, to prepare the reports page

By way of comparison, 4 CPC took 209 bureaucrats and support staff to prepare. Officers who helped prepare the report were from Indian Administrative Service, Indian Forest Service, Indian Audit and Accounts Service , Indian Railway Accounts Service, Indian Postal Service, Indian Ordnance Factories Service. Indian Defence Accounts Service, Indian Revenue Service, Indian Economic Service, Central Secretariat Service, Border Security Force, Geological Survey of India, Central Public Works Department and National Informatics Centre.:paras 1.63

It cost of Rs. 17,000 crore.

Part VI of report dealt with pensions and retirement benefits for civilian; Part VII dealt with pay scales and allowances of Armed Forces personnel. Part IX is the concluding part of the Report.:page13

Financial Impact of Fifth pay commission.

With the implementation of the Fifth Pay commission a huge burden was taken up by the central government. It declared hike in salary of about 3.3 million central government employees. Further, it also insisted on pay revision at the state government level.

The Fifth pay commission disturbed the financial situation of both the Central and the State Governments and led to a hue and cry after its implementation.

 The Central government's wage bill before the implementation of the commission’s recommendations was 218.85 billion in 1996-1997 which also included pension dues, and by 1999 it shot up by about 99% and the burden on the exchequer was about to Rs 435.68 billion in 1999-2000.

With regard’s to the state government the bill went up by 74%. The state governments which paid about Rs 515.48 billion in 1997 as salaries, had to pay Rs 898.13 billion in 1999 as salaries. This clearly indicates the burden on the state and the central government.

Many economists say that about 90% of the revenue of the state went in as salaries[verification needed]. 13 states of India were not in a position to pay salaries to its employees due to the hike and hence the central government’s help was sought[citation needed].

Other recommendations

One of its recommendations was to slash government workforce by about 30%.

It also recommended to reduce the number of pay scale from 51 to 34 and to not recruit to about 3,50,000 vacant position in the government.

None of these recommendations were implemented.

Criticisms by World Bank.

The World Bank criticized the Fifth Pay Commission, stating that the Fifth Pay Commission as the 'single largest adverse shock' to the public finance of the nation. It also said that the number of employees of the government was 'not unduly' large,

but there was a 'pronounced imbalance' in the skills.

It noted that about 93% of the employees were of 3rd or 4th grade.

Fifth Pay Commission and the Armed forces

Terms of Reference.

The 4CPC, for unknown reasons, had no separate   Terms of Reference. for the Armed Forces.

The 5 CPC, however, for the first time was asked to examine the terms and conditions of the Armed Forces, and make suggestions for what is "considered desirable and feasible".:para 1.2

Thus, the pay commission noted ambiguously that "even their recommendations with regard to changes in the structure of emoluments including death cum gratuity in respect of Armed Forces Personnel had to be made with due regard to the terms and conditions of their service"para 1.2

Lateral Transfer.

The 5 CPC, in its report submitted in January 1997, recommended increase in posts for Armed Forces personnel in Group C and D in Central Armed Police Forces (CAPFs) from 10 to 25percent. For Short Service Commissioned Officers, on completion of their military service, 5 CPC recommended earmarking 25 percent officer's post in the CAPFs.
These recommendations by the pay Commission were intended to reduce the defence pension bill; save on training and recruitment costs; provide trained manpower to government departments; and provide soldiers a second career after their term of military engagement.:p 139, para 2.4.4

These recommendations of the Pay Commission were, however, mostly ignored by the Janata Dal (United Front), and BJP Government of Atal Bihari Vajpayee that followed. Mulayam Singh Yadav, Defence Minister (1 June 1996 – 19 March 1998),Indrajit Gupta (Communist Party of India-United Front), Home Minister (29 June 1996 – 19 March 1998), and L K Advani (BJP), Home Minister (19 March 1998 – 22 May 2004) did little to implement these recommendations.

 The problem festered, and the pension bill ballooned .p 139, para 2.4.4

Sixth Pay Commission.
Sixth Central Pay Commission

In July 2006, the Cabinet approved setting up of the sixth pay commission. This commission has been set up under Justice B.N.Srikrishna with a timeframe of 18 months. The cost of hikes in salaries is anticipated to be about Rs. 20,000 crore for a total of 5.5 million government employees as per media speculation on the 6th Pay Commission, the report of which is expected to be handed over in late March/early April 2008.

The employees had threatened to go on a nationwide strike if the government failed to hike their salaries. Reasons for the demand of hikes include rising inflation and rising pay in the private sector due to the forces of Globalization.

The Class 1 officers in India are grossly underpaid with an IAS officer with 25 years of work experience earning just Rs.55,000 as his take home pay. Pay arrears are due from January 2006 till September 2008. Almost all the Government employees received 40% of the pay arrears in 2008 and balance 60% arrears (as promised by Government) has also been credited in Government employees account in 2009.

The Sixth Pay Commission mainly focused on removing ambiguity in respect of various pay scales and mainly focused on reducing number of pay scales and bring the idea of pay bands.
 It recommended for removal of Group-D cadre.

Seventh Pay Commission.

The Government of India has initiated the process to constitute the 7th Central Pay Commission along with finalization of its Terms of Reference, the composition and the possible timeframe for submission of its Report.On September 25, 2013 the finance minister P Chidambaram announced that the Prime Minister Manmohan Singh has approved the constitution of the 7th Pay Commission. Its recommendations are likely to be implemented with effect from January 1, 2016. Justice A.K Mathur will be heading the Seventh Pay Commission, announcement of which was done on 4 February 2014.

name designation role in commission justice Ashok Kumar Mathur Retired Judge of the Supreme Court and Retired Chairman, Armed Forces Tribunal Chairman Vivek Rae Secretary, Ministry of Petroleum and Natural GasbMember (Full Time)Dr. Rathin Roy  Director, NIPFPMember (Part Time)Meena Agarwal OSD, Department of Expenditure,Ministry of FinancebSecretary

On 29 Jun 2016, Government accepted the recommendation of 7th Pay Commission Report with meager increase in salary of 14% after six month of intense evaluation and successive discussions.

The Finance Minister of India claimed it historical increase of salaries due to little knowledge of Sixth Pay Commission.

Controversy.

In May 2014, a group of retired government officials, challenged the inclusion of a senior IAS officer in the three member 7th Pay Commission, in the Delhi High Court. They alleged that this would lead an inherent bias in the commission's recommendations towards IAS officers.

Several government services, most notably the armed forces have complained bitterly of down gradation due to pay commissions exceeding their brief, and introducing anomalies in the relative scales of pay of government services. At present, the armed forces have represented to the government for the removal of anomalies which it is felt that the civil servants on the commission have deliberately introduced to upgrade themselves vis-a-vis service officers in the defence forces.

SC constitute a new Pay commission for trial court judges

The chief justice and other supreme court and high court judges got a threefold salary hike in the sixth pay commission however the trial court judges were paid low and a bench comprising Chief Justice K G Balakrishnan and Justices P Sathasivam and J M Panchal constituted a new pay commission for the trial court judges headed by retired Madras High Court judge, Justice E Padmanabhan for recommendation of revision of about 14000 trial court judges.

 This order from the SC came because of a petition filed by All India Judges Association, which stated that the first judicial commission which was headed by Justice Jagannatha Shetty had said that there should be an upward revision of salaries of lower court judges in proportion to the hike to the judges of high court and Supreme Court. It also sought direction from the court to the centre for setting up a committee "forthwith appoint a committee of one or more persons to look into the matter" relating the salary of officers in the lower judiciary.

The Seventh Central Pay Commission submits its report

On November 19, 2015, the 7th Central Pay Commission recommended 23.55% hike in pay and allowances which will be implemented from January 1, 2016. The full report is available on the website of Ministry of Finance, Government of India.

The Union Cabinet approves 7th Pay panel recommendations on 29th June 2016. The recommendations will be effected from 1st January 2016.

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Col Lamba ( one man army )