Seventh CPC recommends higher salaries, OROP, big incentives to short service officers

Commission divided on “non-functional upgradation” (NFU) to military

By Ajai Shukla

Business Standard, 20th Nov 15

The Seventh Central Pay Commission (CPC) has proposed a minimum 14.29 per cent raise in baseline military salaries, along with a simplified salary structure that merges “grade pay” with the pay band for each rank.

In recommendations that could meet the demands of the “one rank, one pension” (OROP) agitation, the report recommends giving pensioners a choice between two formulations. It proposes major incentives to “short service commission” (SSC) officers, to prepare them for second careers after short tenures in the military.

However, the Seventh CPC is divided on the controversial issue of extending “non-functional upgradation”, (NFU) to the military, which was left out when the Sixth CPC extended NFU to Organised Group ‘A’ Services in 2006.

Salaries raised

The starting salary of a sepoy (from “sipahi”, the army’s entry rank) has been raised from Rs 8,460 (plus grade pay, plus allowances) to Rs 21,700 per month. At the other end of the rank spectrum, a lieutenant general will now earn above Rs 200,000 per month.

New salaries in the lowest grades (Pay Band 1) will be 2.57 times higher than the existing base line salaries. This caters for a multiplier of 2.25 for merging Dearness Allowance (DA) into the salary.

According to the report, the sepoy’s raised salary (2.57 times his current salary) “includes a factor of 2.25 to account for DA neutralisation, assuming that the rate of Dearness Allowance would be 125 per cent at the time of implementation of the new pay as on 01.01.2016 (January 1, 2016).”

Higher pay bands will get progressively higher salaries “on the premise that role, responsibility and accountability increases at each step in the hierarchy.” Pay Band 2 (junior commissioned officers, or JCOs) will get a higher index of 2.62; Pay Band 3 (lieutenant to major) will get 2.67; The “senior administrative grade” and “higher administrative grades” (lieutenant colonel to lieutenant general) will get a multiple of 2.72. The apex grade (army commanders) will get a multiple of 2.81, while the three service chiefs will benefit from an index of 2.78.

While parity has been sought between military and civilian salaries, the former would continue to benefit from “military service pay”, or MSP, to compensate them for the rigorous conditions of military service. MSP for military officers has been raised from Rs 6,000 to Rs 15,500 per month; and for JCOs and other ranks (ORs) from Rs 2,000 to Rs 5,200 per month. MSP is reckoned as basic pay for the purpose of calculating DA and pensions.

Pensions

In accordance with its mandate, the Pay Commission has deliberated in detail on military pensions and provided detailed recommendations. It has recommended two formulae for calculating pensions, with the pensioner being entitled to the higher of the two calculations.

In the first calculation, each pensioner who retires before January 1, 2016 (when the Seventh CPC is expected to be implemented) will first be fixed in the new pay matrix, based on the rank at which he retired, as well as his length of service. Then, after adding MSP to that to arrive at his notional salary, his pension will be half that figure.

The second calculation will be based on the pension fixed when the Sixth CPC was implemented. That earlier pension will be multiplied by 2.57 to arrive at the revised pension. The pensioner will then get whichever pension is the higher. Since calculating the first figure might take time, the Seventh CPC has recommended that the pension be paid according to the latter calculation till the former is completed.

As on January 1, 2014, there were 24.1 lakh defence pensioners, out of which 18.6 lakhs were military personnel and 5.5 lakh were defence civilians.

A proposal that the government will scrutinise minutely potentially extends the benefits of OROP to civilian government employees and CAPFs like the Central Reserve Police Force and the Border Security Force.

According to the report, “The commission recommends revised pension formulation for civ employees including CAPF and defence personnel who have retired before 01/01/2016. This formulation will bring about parity between past pensioners with current retirees.”

Short Service Commission

The Seventh CPC has proposed important new benefits for Short Service Commission (SSC) officers, who join the army for five-year tenures, extendable to ten years, and then a maximum of fourteen years. SSC officers do not earn pension, which becomes payable only to officers who complete 20 years of service. The army needs more SSC officers, who would leave service early, reducing the already stiff competition for higher ranks.

To make SSC more attractive, the report recommends “severance compensation”, amounting to “two months pay for each year up to 10 years, and four months pay beyond 10 years to 14 years.” In addition, the report proposes “professional enhancement training leave” of two years, to SSC officers opting for another five-year extension.

This would allow SSC officers to obtain skills for second careers after leaving service, and a corpus to establish themselves in that career.

In addition, the report recommends that SSC officers are granted concessions for appearing in civil service examinations, including reduction in the number of papers from eight to four; introduction of military science as an optional subject; and age relaxation of five years.

Non-Functional Upgradation (NFU)

The Seventh CPC has disagreed within itself on the grant of NFU to the military. The Sixth CPC had extended NFU to Organised Group ‘A’ Services, but not to the military. NFU allows officers who are not approved for promotion to draw the salary of higher promotion grades, as their more meritorious batch-mates are promoted to those grades.

The Chairman felt that “NFU should be extended to the officers of the Defence forces and CAPF”. However, Vivek Rae and Rathin Roy, the two members, have dissented with the chairman’s views, opining: “NFU till SAG and HAG level, granted to Organised Group ‘A’ Services should be withdrawn. They have also not supported extension of NFU to Defence Forces and CAPFs, including ICG (Indian Coast Guard”.

The government appointed the Seventh Pay Commission on February 28, 2014. Retired Supreme Court judge, Justice Ashok Kumar Mathur, heads it and its two members are former petroleum secretary, Vivek Rae; and Rathin Roy, director of the National Institute of Public Finance and Policy (NIPFP). Its secretary is Meena Agarwal. The commission was to submit its recommendations by December 31, 2015.