REPORT TOMORROW....20/03/2008

Report Tomorrow : 42% Basic hike ; Delink pay from post;

REPORT TOMORROW Also proposed: Delink pay from post, link scientist salaries to performance; govt works with 20%

New Delhi, March 18: The festive season this weekend will bring extra cheer to 55 lakh Central government employees as the Sixth Pay Commission is likely to recommend an increase of up to 42% in their salaries and pensions when it submits its report on Thursday.

While the number of salary grades will be pruned to 18 from the existing 33, the basic salary proposed is 35 to 42% higher than what each employee currently gets, inclusive of dearness pay and dearness allowance.

The house rent allowance will become city-specific with those living in metros getting the full 30% of the basic salary. But for other towns, the HRA could be capped at 15% of the basic salary.

The commission is also expected to recommend the delinking of pay from post so that an employee would get higher scale at fixed time intervals. That is, he need not await his promotion to become eligible for the next salary grade.

This was one of the suggestions by the Department of Personnel & Training which had argued that while there would be stagnation in promotion, the employees should not be devoid of pay hikes.

There would be performance-related pay for scientists so that they could be put on a fast track to reverse brain drain. These fast performers would be shifted to contractual agreement with their salaries coming from the project money.

Although the government is free to accept or reject all or part of the commission’s recommendations, considering that the UPA government has entered election mode, the revised pay packets could get approved.

Incidentally, as first reported in The Indian Express, the Finance Ministry has been working out numbers assuming an average 20% increase in salaries and pensions with past payments from January 2006 to the implementation date tucked away into GPF to bring down the instant payout.

This 20% translates into an increase in the wage and pension bill by Rs 11,500 crore.

Finance Minister P Chidambaram provided for Rs 26,657 crore or 0.5% of the fiscal deficit as the “headroom,” but the margin reduced after a supplementary demand for Rs 10,000 crore for the loan waiver of farmers.

25 to 33 % increase in salary

Here's another indication that the UPA is in election mode. After that farm loan waiver and tax breaks for the middle-class, the government is all set to spend Rs 53,000 crore on salary hikes for central government employees.
The wait is almost over for the lakhs of employees who serve the government of India. Sources have informed CNBC-TV18 that the sixth Pay Commission is close to finalising its recommendations and a windfall is on the cards for employees.
Salaries are expected to increase by 25 to 33% across the board and the hike will take place with retrospective effect from January 1, 2006. However, there is no scope for any interim relief till the recommendations are implemented.
But the recommendations come at a time when the government is already burdened with a huge farm loan waiver and other schemes benefiting the social sector. But fears of pressure on the treasury are countered by the larger than expected tax collections and an improving fiscal deficit.
But some voices feel the government may need a few years to absorb the financial impact, as had happened during the fifth Pay Commission. While the Railways have made some provisions for the pay hike in their Budget, the government may seek grants in Parliament.
Based on 2007-08 figures, the government may have to shell out an extra Rs 13,000 crore for salaries while arrears may cost up to Rs 40,000 crore and may need to be paid in installments.
State governments are not obliged to match the pay scales set by the Centre. But with the state-centre wage gap widening, the states may have no option but try and match up to the Centre's bonanza.

Arrears may be given in installments

If you have any big planning of investment in share market after implementation of sixth pay commission report with extra money from arrears, you will be disappointed to know that you may not get full arrears amount in a lump sum.

Arrears may be paid to central government employees in instalment after implementing 6th pay commission report. This is speculated at special report on 6th pay commission on CNBC Aawaz TV channel (13.03.2008).

In this program, it is also speculated that pay hike will be around 33% and arrears will be effective from January 2006. According to this TV program, payment of arrears in instalment will reduce sudden load on government budget.

Chidambaram to disclose resources for loan waiver

Chennai (PTI): Finance Minister P Chidambaram has said he will inform the Parliament on Friday how the government would compensate banks for the losses incurred on account of the farm loan waiver worth Rs 60,000 crore.

"I'll explain about the resources during my reply to the discussion on the budget on Friday," Chidambaram said here on Sunday night, while addressing Congress workers.

He added, "another bonanza awaits people when the sixth Pay Commission submits its report by the end of this month."

On the doubts raised by the opposition led by BJP and some economists about the ability of the government to compensate the banks, saying the loan waiver may lead to the collapse of some cooperative banks, he said the government would compensate the banks.

"Will I and Prime Minister Manmohan Singh appear for examination without making proper preparations?", he asked.

Coming down heavily on opposition parties for describing the budget as election-oriented, Chidambaram said elections may come and go and so will governments. But people's welfare and the country's development should continue.

"Those who stalled the proceedings of Parliament for three days raising the farmers' issue, were stunned when I announced the waiver of farm loans at one stroke. Now they ask where are the resources," he said.

Chidambaram said under the UPA Government's rule, the country's economic growth rate had reached 8.8 per cent, against 5.9 per cent during the previous BJP-led NDA regime. If the present rate was sustained, one crore jobs would be generated per annum and the per capita income would increase to 7.2 per cent.

Pay Commission impact may be over 20000 Crores

The impact of the impending Sixth Pay Commission recommendations is expected to be within 0.4 per cent of Gross Domestic Product (GDP), according to Finance Secretary D Subbarao.
The fifth Pay Commission award of 1996 had translated into an impact of 0.4 per cent of GDP then. “I do not expect it to be higher than that level this time,” Subbarao told Business Standard.
Given that the Budget has projected GDP at Rs 53,03,770 crore in 2008-09, the impact of the award may well be Rs 21,215 crore.
Subbarao added he expects the economy to grow faster than the government’s ballpark estimates of a real GDP growth rate of 8.5 per cent, and annual inflation rate to be 4.5 per cent, in 2008-09.
On the question of off-Budget liabilities, the finance secretary said the Budget had acknowledged them for the first time, bringing greater transparency to the numbers.
On his part, Revenue Secretary P V Bhide said it was not possible to simultaneously increase the income tax exemption limit as well as the deduction limit under section 80C. “We cannot satisfy everyone”, he said.
Bhide also said that despite the higher exemption limit, it would not take much time for those people who go out of the tax net to come back into the net, as salaries are rising 15 to 20 per cent annually. “If not this year, they will come back again as they cross the threshold limit,” he said.

Another D.A for Govt Employees

A reliable source in the Finance Ministry revealed that there will be a announcement of a 6 percent Dearness Allowance for Central Govt. employees and pensioners very shortly.
The D.A will be effective from 1st January 2008. This will be a very good news for the employees just eve of the 6th pay commission recommendations. The commission is likely to submit it's report within 3rd week of this month which may cost about Rs 21000 crores to the Govt.

	Old Scale	New Scale		Group
1.	2550-55-2660-60-3200	S1	6500-150-9500	Auxiliary Staff- Gr D
2.	2610-60-3150-65-3540
3.	2650-65-3300-70-4000	S2	7000-200-13000
4.	2750-70-3800-75-4400(D)
	2750-70-3800-75-4400 (C)	S3	7500-250-12500	Supporting Staff – C
5.	3060-75-3950-80-4500
6.	3200-85-4900
7.	4000-100-6000	S4	10000-300-17500
8.	4500-125-7000
9.	5000-150-8000 C/B N/G	S5	12500-400-22500	Supervisory Staff, B/NG
10.	5500-175-9000 C/B N/G
11.	6000-190-9800 C/B N/G	S6	15000-500-27000
12.	6500-200-9800 C/B N/G
13.	6500-200-10500 C/B N/G
	6500-200-10500 B GAZ	S7	17500-800-30500
14.	7450-225-11500 B G/NG & C
15.	7500-200-12000
16.	8000-275-13500	S8	20000-800-35000	Asst. Officer B
17.	9000 (Fixed)
18.	9000-275-9550
19.	10325-325-12575
20.	10000-325-15200	S9	25000-1000-40000	JS
21.	10650-325-15850
22.	12000-375-16500	S10	30000-1200-48000	SS
23.	12750-375-16500
24.	12000-375-18000
25.	12300-400-18300
26.	14300-400-18300
27.	15100-400-18300
28.	16400-450-20000	S11	42000-1400-56000	JAG/SG
29.	16400-450-20900
30.	14300-450-22400
31.	16400-450-20900-500-22400			NFIG
32.	18500-500-22400	S12	60000 (Fixed)	SAG
33.	22400-525-24500	S13	65000 (Fixed)	HAG
34.	22400-500-25000	S14	70000 (Fixed)	A Secy
35.	24050-550-25000
36.	25000 (Fixed)	S15	75000 (Fixed)	Secy
37.	30000 (Fixed)	S16	80000 (Fixed)	C Secy

Pay panel likely to suggest institutionalising this practice.
Bureaucrats may be allowed to serve significant stints outside of government in private sector companies to allow mid-career officers to pick up new skills and build a nest-egg as a bonus.
Government officials suggest the Sixth Pay Commission is likely to recommend that this practice be institutionalised in administrative rules.
Currently, civil servants can go on deputation to various multilateral bodies and non-governmental agencies in India and abroad. They can also take extended time off after putting in a minimum number of years in service for further studies subject to government approval.
Officials said private sector stints could also be considered some sort of compensation, since government salaries will continue to lag private sector compensation despite the Sixth Pay Commission award due March 31.
This will be particularly true for senior government servants whose salaries cannot be pegged to the massive compensation paid to private sector executives in comparable positions. “The impact of the award is likely to be felt more at the lower levels of bureaucracy than the highest levels,” officials said.
In reply to a Commission questionnaire, the Indian Administrative and Civil Service (Central) Association has demanded pay scales at market rates.
The Sixth Pay Commission was constituted last year by the United Progressive Alliance government and is chaired by Justice B N Srikrishna.
The central government is preparing for a fiscal impact of around Rs 21,000 crore on account of the award, though the likely expenditure has not been provided for in the Budget.