Income Tax, Women Employees, Bonus, Transfer Policy, LDC-UDC Matter, Anamolies of 6th CPC, NPS: Chapter 17 of JC, JCM(Staff Side) memorandum to 7th CPC

Chapter XVII of NC, JCM(Staff Side)’s Memorandum includes these points:- Income tax on salary, Liabilities of a person who Die in harness, Women Employees, Downsizing / Outsourcing/Contractorisation, Regularisation of Casual / Contingent / Daily Rated Workers, Bonus, Transfer Policy, Secretariat & Field Offices, Need for a Effective Grievance Redressal Procedure, Equal Pay for Equal Work, Anomalies relating to Sixth CPC wage structure, New Pension Scheme, Special increments, Special amenities for women employees, National holiday compensation, Insurance coverage etc.

Chapter XVII

17.1.Income tax on salary.

The 5th CPC had engaged the Fiscal Research Foundation to conduct a study to explore the possibilities of exempting Government employees from payment of Income tax on their salary income. Alternate suggestion was to treat the salary and allowance of the Government employees as net of tax. Salary, once it is declared net of tax, the Government being the employer, will have to undertake the responsibility of paying tax on behalf of its employees. In Sri Lanka, the salary of Government employees is exempted from tax. Though the Fiscal Research Foundation suggested the same treatment to be meted out to the Government employees as is available for the employees in Sri Lanka , the 5th CPC for good and sound reason made only a modest suggestion of treating the allowances in the case of employees and in the case of pensioners, the pension and other pensionary allowances as net of tax. The Commission cited Section 195A of the Income tax Act,1961 whereby the allowances receivable by an employee of the External Affairs Ministry on foreign posting is treated as net of tax.

17.1.2. The 5th CPC recommendation was not accepted by the Government. In our memorandum to the 6th CPC we pleaded that they might reiterate the suggestions made by the 5th CPC in the matter. However, the 6th CPC did not make any mention of it in their report.

17.1.3. In this connection, we may bring to the notice of the 7th CPC that the Government had been allowing certain percentage of salary income in respect of all wage earners as a deduction in the computation of income under the I.T. Act. The said provision was introduced in 1974-75 for the logical reasoning that an employee has to incur certain expenditure which could be considered as incidental to his earning the salary. In the initial years, it was a lump-sum amount but later raised to a specified percentage of the salary subject to certain maximum quantum ceiling limit. Finally before it was withdrawn the entitled deduction was 30% of the salary income. With effect from.1.4. 2006, the Government removed the provisions of Section 16(1) and consequently the deduction of 30%, thereby increasing the tax liability of the salaried class of employees whereas the deduction admissible for the business community and others provided for in the section 28 to 42 was retained. In the light of the 5th CPC recommendation, the Government ought not have increased the tax liability of the Government employees. Salaried class of employees are the honest tax payers in the country and the tax due from them is deducted from source even before it becomes assessable. We, therefore, request the 7th CPC to recommend to the Government for the reintroduction of the provisions of section 16(1) and allow deduction of 30% of the salary income to arrive at the taxable income. We also request that the Commission should ask the Government to act upon the recommendations of the 5th CPC in the matter.

17.2.Liabilities of a person who Die in harness.

The number of persons who die in harness in Government service has been increasing every year. Whether it is a universal phenomenon or a peculiar situation in Government Service is not known. We have dealt with, to some extent, the agony and awful experience of the family members of those who die in harness, while dealing with the compassionate appointment elsewhere in this memorandum. The Government having curtailed the compassionate appointments to the extent of 5% of the vacancies, the family members of the deceased employees are left in great distress. At the time of death the Government employee might have been in debt to the Government on various accounts. It becomes next to impossible for the family members to discharge the liabilities, without further entering into the debt trap of the unscrupulous money lenders. Such a situation, if allowed to develop, will ruin that family.

17.2.2. We, therefore, propose that the 7th CPC may recommend to the Government for the waiver of all governmental dues in the case of an employee who die in harness.

17.3.Women Employees

The 5th CPC recognised the need for provision of special facilities for women employees and recommended certain measures viz., flexi time, Sub-reservation, increasing the age of recruitment, Public convenience facilities, Separate women’s hostel etc.,

17.3.2. Most of these recommendations have not even been considered by the Government. These are – Introduction of flexi time and flexi place work schedules even on experimental basis in some offices; serving women be given option to work half time for a maximum of six years in a career; identification of certain professions to be manned only by women employees; enhancing age of recruitment to 35 years, construction of more single women’s hostels; creation of earned leave bank so that wife could avail earned leave at her husband’s credit etc. We request the VII

CPC to insist that these recommendations are considered and wherever possible, implemented by the Government.

17.3.3. Further, the guidelines for posting husband and wife in the same station are not being observed particularly in case of Gr C women employees. The guidelines should be made mandatory. Further it is needed to implement the recommendations of the National Women’s Commission for 30%, sub-reservation which will automatically enthuse women to equip them and be in the mainstream. A large number of women employees are facing problems like removal of uteruses etc.,(Hysterctomy) after attaining the age of 40 years or more which requires special rest. The women employees may be granted one month special leave for such purposes.

17.4.Downsizing / Outsourcing

Contractorisation

To overcome the difficulties emanating from the total ban on recruitment and creation of posts and more specifically impacted by the executive fiat of the Govt. of India issued in the year 2000, many departments had to resort to outsourcing its functions and contractorisation of jobs. The VI CPC had recommended the contractorisation of class IV jobs. This has led to a situation in which some offices were virtually closed down and a few others were privatised or contractorised. The large scale outsourcing and contractorisation of functions had a telling effect on the efficacy of the Government departments. The delivery system was adversely affected and the public at large suffered due to the inordinate delay it caused in getting the requisite service. The financial outlay for outsourcing of functions of each department increased enormously over the years. The quality of work suffered. In order to ensure that the people do get a better and efficient service from the Government departments and to raise the image of the Government employees in the eyes of the common people, it is necessary that the present scheme of outsourcing and contractorisation of essential functions of the Government must be abandoned. The practice of outsourcing and contractorisation is nothing but a cruel exploitation of the alarming situation of unemployment. The system of outsourcing of the functions seeks to informalise the workforce. The contract/casual workers get not even one third of the salary of the regular work force. They have no social security benefits like pension, provident fund gratuity etc.

17.4.2. We, therefore request the pay commission to recommend for scrapping of downsizing Outsourcing/ Contractorisation / of Central Government functions

17.5.Regularisation of Casual / Contingent /

Daily Rated Workers

The practice of employing daily rated (called contingency paid) employee was resorted to in 1980s. No new posts were being created though the volume of work had been increasing in any department. The Department of Personnel and Training in response to a court directive issued a scheme under which all such contingency workers who had worked for 204 days in a year for two years consecutively were granted temporary status placing them in Regular Pay Scale and with certain other benefits. They were then required to be regularized against the vacancies .As their regularization took long time, it was agreed by the Government in the National Council of JCM that 50% of the service rendered by them between the grant of Temporary Status and regularization will count as service qualifying for pension. This scheme was however applicable only in respect of those casual workers who were in service upto September, 1993.

17.5.2. Despite strict instructions from DOPT to stop the practice of engaging casual workers it continued for all the years thereafter and intensified between 2001 and 2009. This was because of the reason that the Government issued executive instruction not to create any posts and abolish 2/3 vacant posts every year. None of these workers were even granted temporary status and no steps were taken to regularize them. Supreme Court has again directed that the practice of casual employment should end. The court also directed that those casual workers who have already completed 10 years of service on the date of their judgement may be regularized. There are still a large number of such employees who had not completed 10 years of service on the above crucial date. For them there is no hope of regularization.

17.5.3. The very fact that such employees have continued in service for a long period establishes that they are needed in the interest of the work. They are therefore, to be regularised and extended all the benefits which are available to regular employees.

17.5.4. We, therefore propose that regularization of such contingency paid employees should be ensured from the date they have completed two years of continuous service (ignoring the interruption imposed by the administration every year to ensure that they do not have continuity) if necessary by creating supernumerary or shadow posts for the period till a vacancy in the cadre takes places..

17.5..5. Alternatively entire service rendered by such staff after first two years may be deemed as regular service not only as qualifying service for pension but also for extension of all other benefits/ entitlements admissible to a regular employee. In no case, such employee be thrown out of service to be substituted by a worker provided by contractors.

17.6.Bonus

The evolution of Bonus has been dealt with by the V CPC. We therefore are not reiterating those developments.

17.6.2. In our view, since Productivity Linked Bonus has been granted on the basis of a bilateral agreement, this is out of the purview of review of any commission.

17.6.3. It is only the Adhoc Bonus to those Central Government employees who are not covered by any productivity Linked Bonus agreements which is being reviewed by us in this chapter and to suggest the measures which should be taken to evolve an appropriate Bonus to such employees.

17.6.4. A Group of Officers under the Chairmanship of Shri. Bazle Karim, the then secretary (Co-ordination) in Cabinet Secretariat was set up to consider the long pending demand for grant of Bonus to those Central Government employees who were not covered by the PLB Schemes. This group in their report expressed the view that the Government Departments constitute a single infrastructure for economy as a whole and felt that there should not be any sense of discrimination resulting in demoralization among them as a group when the service conditions were uniform all along. The Group suggested the evolution of PLB Scheme for Central Government employees as a whole. They also suggested that pending evolution of a single scheme of Bonus for all employees, the remaining employees who were not covered by the PLB were to be paid exgratia (Adhoc) Bonus equal to 15 days salary in 1982-83

17.6.5. The report of this group has not been published. It was not given even to the VCPC on demand. The Confederation of Central Government Employees and Workers, however, could supply only an extract from the said report alongwith their memorandum to the V CPC.

17.6.6 Even to get the Adhoc Bonus equal to pay of 15 days salary in 1982-83, leaders of the Confederation had to start an indefinite fast which lasted for 7 days when the Government sanctioned Adhoc Bonus equal to 15 days salary.

17.6.7. The number of days for which Adhoc Bonus has been paid to Central Government Employees not covered by PLB Scheme since 1982-83 is indicated in the following table:

17.6.8. The Confederation’s representatives had been pressing the demand for evolution of PLB Schemes on the basis of parameters framed by the Government after discussion in the respective departmental councils. But so far the Government has not been able to frame these parameters. This item is still pending in the agenda of National Council JCM.

17.6.9. The staff side had demanded increase in Adhoc Bonus on the basis of increases In PLB Schemes every year and that was why the Adhoc Bonus from 15 days salary during 1982-83 was increased to 30 days salary in year 1994-95. For last 20 years no further increase has been allowed.

17.6.10. The V CPC recommendation that the Adhoc Bonus Schemes should be replaced by a Productivity Linked Bonus to be evolved by each department in consultation with experts in the field and the departmental council of JCM within a period of 9 months remains on paper because Government have not issued the Notification to this effect for last 16 years.

In the meantime the Sixth Pay Commission has made a sweeping suggestion that the Adhoc Bonus Scheme should cease immediately and be replaced by what they have called PRIS-Performance Related Incentive Scheme.

17.6.11. Since this Performance Related Incentive Scheme recommended by VI CPC in their Chapter 2.5 (pages 144-157) still remains to be considered by the Government in consultation with the Staff Side of National Council of JCM. the Adhoc Bonus is also continuing.

17.6.12. We are opposed to the PRIS and Government too does not appear to be in a mood to consider and implement it, we propose that VII CPC may recommend that all departments initiate negotiations in their Departmental Councils to evolve an appropriate productivity linked bonus scheme after consulting experts in the field within a period of one year from the date, the Report of VII CPC is submitted to the Government. Pending finalization of such PLB Schemes the Adhoc Bonus equal to the average increase in the number of days sanctioned under the PLB Scheme may be granted and ensure that under no condition, the number of days be less than 31.

17.6.13. Presently the PLB and adhoc bonus are calculated on the deemed provision that one’s total emoluments is only Rs. 3500/-. This is an absolutely irrational stipulation and must be removed. We request that the Commission to recommend to the Government to remove the said stipulation and grant the bonus on the basis of the actual emolument of the employee.

17.7.Transfer Policy

Government employees by virtue of the terms and conditions of employment are liable to be posted anywhere in India. The Group C employees in larger organisations have the facility of such transfer being restricted to a pre defined area or region or zone. But in smaller departments, they are transferred from one corner of the country to another. Transfer, though inevitable, especially when one is promoted from one grade/cadre to another, is painful for it involves dislocation of the family with concomitant difficulties. The Departments with public dealings has to transfer personnel periodically to maintain objectivity and impartiality in the decision making process. While transfer is unavoidable in civil service, it can be regulated with certain set of rules, procedure, principle and guidelines. Such guidelines will enable the employees to initially prepare him for the eventuality as also to prepare his family to face the difficulties. It is common knowledge that higher authorities often invoke the power to transfer as a potent weapon to punish their subordinates or to mentally harass them with the threat of transfer. Since the transfers are said to be made in “public interest” a phrase with wider purport, the malafide transfers cannot be questioned with success even in courts. The 5th CPC’s recommendation on this issue was worth considering. But the Government did not act upon the suggestion. We reiterate some of the suggestion made by the Commission as under:

(a) The Group-C & D employees, taking into account the fact that their emoluments do not even enable them to make the both ends meet, should not be transferred at all except on their request/compassionate ground;

(b) If transfer becomes necessary on promotion, or due to other administrative exigencies, the same should be subjected to a policy evolved in the Departmental Councils. Every department should therefore, evolve a transfer policy on mutual agreement being reached at the respective Departmental Council or through bilateral discussions. The Official Side in the Counsel will place an item for discussion in the Counsel on transfer guidelines.

(c) No transfer be permitted, which is violative of such an agreement or in the absence of such an agreement having reached in the Council. If such transfers are made sans such an agreement, it shall be instantly cancelled by the Head of Department or Secretary to the Ministry concerned on receipt of a representation for the concerned employee.

(d) In case, no agreement is reached in the Departmental Council, the same should be referred to the Standing Committee of the National Council, JCM, whose decision is to be treated as final.

(e) In respect of other category of officials, the Department of Personnel must be asked to issue instruction in clear terms as per the above quoted recommendation of the 5th CPC.

17.7.2. We request the 7th CPC that the above suggestions made by the 5th CPC in the matter may please be recommend to the Government.

17.8.Secretariat & Field Offices

Since the British days there has been a categorisation of different offices of Central Government viz., Secretariat, Attached offices participating with secretariat, Attached offices not participating with secretariat and subordinate offices. The Higher pay structure was provided for employees working in the secretariat and attached offices participating with secretariat (called Headquarters) and employees of subordinate offices (field offices) were placed in comparatively lower pay scale structure.

17.8.2. Over a period of time, LDC and UDCs working in Headquarters and the field offices were granted the same pay scale treating them as common categories but disparities in the pay scales of higher staff in the secretariat and subordinate offices continued to exist.

17.8.3. The sixth Central Pay Commission stating that in the changed scenario “field offices have become the cutting end of Administration” and determines “whether a particular policy turns out to be a success or failure in terms of actual benefit to the consumer”, has concluded that “the time has come to grant parity between similarly placed personnel employed in field offices and in the secretariat”. However the conclusion was applied by the VI CPC only in the case of Assistant (LDCs and UDCs in the field and secretariat offices already being in the identical pay scale).

17.8.4. The VI CPC observed:

17.8.5. Viewed from the fact that the parity in pay scales does exist between Central Secretariat and field formation from the level of Deputy Secretary and above, the contention of the VI CPC that higher pay scales is justified in the case of section officer and the under secretary is incomprehensible.

17.8.6. The same VI CPC which advocates for strengthening the delivery lines ( meaning field offices) contradicts itself by pointing out the unexplained “functional consideration and relativities across the Board “and pleads inability to extend parity beyond the Assistants.

17.8.7. According to us the only reason the secretariat staff were placed at the higher pedestal was that they were in the “Sanctum Sanctorum”. This is proved from the fact that whenever the parity was extended to certain posts like senior Auditors/Senior Accountants etc., with Assistants, the Department of Personnel and Training further upgraded the pay scales of Assistants of CSS retrospectively and even during the pendency of VI CPC, Assistants were granted pay scale at par with the pay scale of section officer which was a promotion post for Assistants. The parity granted to posts in field offices with the pay band and Grade pay of Assistants by merging pay scales 5000-8000, 5500-9000 in to 6500-10500 granting Grade Pay of Rs.4200 has been again disturbed by upgrading the pay scales of Assistants of Central Secretariat in PB 2 by granting Grade Pay of 4600/-

17.8.8. We, therefore propose that VII CPC may take note the above developments to ensure that the parity of pay structure obtaining in the secretariat and the field offices is maintained and it is extended to all pay scales beyond that of the Assistants up to the level of under secretary. Corollary of this would be that pay structure evolved by the VII CPC would apply for various cadres of both of the secretariat as also the field offices.

17.9.Need for a Effective Grievance Redressal Procedure

Joint Consultative Machinery and Compulsory Arbitration has been instituted and has been functioning since 1966.

This scheme covers all regular civil employees of Central Government except:

(a) The Class I (now Group A) Services

(b) The Class II (now Group B) services other than central secretariat services and other comparable services in the Headquarters organisation of the Government.

(c) Persons in industrial establishments employed mainly in managerial or administrative capacity and those who being employed in supervisory capacity draw salary in scales going beyond Rs. 900/0 p.m.

(d) Employees of union territories and

(e) Police Personnel

17.9.2 It would be seen that Group B officials of the Headquarters Organisations have been covered under this scheme which is discriminatory as the Group B officers of all field offices have been left without the facility of any grievance Redressal procedure.

17.9.3. In the case of item ‘C’ above an amendment had been made by the Department of Personnel and Administrative Reforms (vide their OM No.S/14/74-JCA dated 11-06-74) taking note of the fact that as per the 3rd CPC wage structure all whose pay scales going beyond Rs.900 would be in Group B service and in order to ensure that those who were already covered by the scheme continue to be so, the pay limit of Rs.575/- was altered to Rs. 900 .

17.9.4 The present situation is that many other categories of employees who were Group ‘C’ employees have since become Group ‘B’ employees on account of revised classification of the Department of Personnel and the revision of pay scales. They have now been rendered out of the coverage of JCM.

17.9.5. It is, therefore, necessary that all categories and cadres of employees and officers, who were covered under the JCM Scheme in 1966 (i.e. the year in which the JCM came into existence) must continue to be covered under the scheme irrespective of the change of classification or revision of pay scales that have been ordered from time to time. In the present context all employees drawing grade pay upto and including Rs. 4800 (PB2) must be convered by the JCM Scheme.

17.9.6. The scope of the National Council of JCM includes matters affecting Central Government employees generally such as minimum remuneration, dearness allowance and pay of common categories etc., besides all matters relating to conditions of work, welfare of employees and improvement of efficiency and standard of work.

17.9.7. If we review the issues taken up for settlement in this forum it would be observed that issues of minimum wage, revision of wage structure, Dearness Allowance merger of DA with pay interim Relief, Revision of wages could not be resolved through peaceful discussions. Only when the employees’ Organisations unite and decide to go on strike, the Government settles these demands. This very categorically discloses that the Government does not believe in a peaceful bilateral settlement of wages and allowances. This has converted the JCM forum into a debating or talking shop. When such issues are not settled in the forum of JCM, a situation of rising discontent is built up over a long period and when it reaches its peak point, it burst into a confrontation. During this long period of rising discontent the efficiency of the Administration is severely affected.

17.9.8. It is, therefore necessary that the Government is made to accept that all issues which come up for settlement before the JCM are settled promptly.

17.9.9. This scheme provides that the official side (representing the Government) would conclude matters at meetings of the councils. In other words there has to be spot settlement of all issues which come up for consideration in the councils of JCM.

17.9.10. In practice it has been seen that issues raised by the staff side have been kept pending for a long time with the result that it has become a very sluggish system of negotiation.

17.9.11. There used to be a system of referring issues on which detailed discussions are needed to sub committees. This has been given up. The agreement reached at the JCM is to be acted upon by the official side subject to the approval of the Cabinet. Under this pretext of the said approval from the Cabinet, the agreements are either deferred or not implemented at all.

17.9.12. Compulsory Arbitration has been provided for, in the matters relating to pay and Allowances ,weekly hours of work and leave, if agreement is not reached after discussion. . On the issue of DA on which disagreement was recorded in 1968, the Government refused to refer the matter to Arbitration and this resulted in a day’s strike by Central Government Employees on 19.9.68.

17.9.13. It has been laid down that subject to overriding authority of Parliament recommendations of Board of Arbitration will be binding on both sides. It has also been agreed that Government would decide whether to accept the award or to refer it to the Parliament for modification/rejection within a period of six months. The Government have kept more than a dozen awards pending for several years ranging from 10 to 25 years now. The credibility of this scheme has been hit and employees are totally frustrated. The Government must respect an award and give benefit of it to its employees.

17.9.14. Even the frequency of meetings of the council which has been fixed as once in four months i.e., atleast 3 meetings in a year have not been observed. In the last 47 years of its existence even the 47th meeting of the National Council is yet to be held whereas the number of meeting ought to have been 130.

17.9.15. In most of the Ministries, the Departmental Councils have ceased to function. Repeated directions from the nodal Authority for JCM, the Department of Personnel and Training to revive these councils have not been heeded. As at present except in Railways, Defence and Postal, Departmental councils in none of the ministries are functioning. We need not place on record how many grievances must have piled up with no forum to voice or seek settlement. Adverse impact of this situation on the efficiency of work in offices can very well be visualised.

17.9.16. To sum up we request the VII CPC to consider and devise ways and means whereby the Government is advised to adhere to the laid down processes and to implement the objectives for which JCM Scheme was operationalised and in particular all Group C and Group B Central Government employees should be brought under the coverage of JCM.

17.9.17. There should be spot settlement in the councils of JCM. Important issues relating to wages etc. should not be evaded / rejected precipitating a situation of confrontation. The schedule of three meetings in a year is to be fully observed. Departmental councils should be revived in all Departments without fail. Arbitration Awards may be implemented and in no case kept pending for more than six months time. System of referring the matters on which immediate agreement is not possible to sub committees for separate discussion and report should be revived.

17.10. Equal Pay for Equal Work

It is the parliament which has to enact a law to regulate recruitment and conditions of service (including wage structure) of Government employees under Article 309 of the Constitution. The President has, until such time that the parliament enacts such a law, been empowered to make rules regulating recruitment and the conditions of service of Central Government employees under proviso to Article 309 of the constitution. Again the President after consultation with the speaker of the House of people or the Chairman of Council of States, as the case may be, makes rules regulating the recruitment and conditions of services of staff of Lok Sabha/Rajya Sabha ( Article 98(3) of the Constitution). In respect of staff working under Comptroller and Auditor General of India the President in consultation with the CAG makes Rules regulating recruitment and conditions of service (Article 148(2) of the constitution). Further it has been provided under Article 146(2) of the constitution that conditions of service of officers and servants of the Supreme Court shall be such as may be prescribed by rules made by the Chief Justice of India or his nominee, of course, subject to approval of the President as regards salaries allowances etc. The result is that wage structure of staff of Supreme Court of India and that of staff of Lok Sabha/Rajya Sabha when compared to wage structure prescribed by rules framed by the President in respect of rest of the Central Government employees are at the higher levels.

17.10.2.For example the pay of Group D employees (now Gr C) in Supreme Court and in Lok Sabha/ Rajya Sabha secretariats is higher than that of Group D employee (now Gr C). Job profiles of this personnel is the same, the only difference which is visible is that generally a Group D employee wears a very shabby uniform. Group D employees of the Supreme Court is very colourful and regal in look. This has happened at the expense of another constitutional principle of equal pay for equal work upheld several times by the Supreme Court.

17.10.3. We propose that the VII CPC may devise a mechanism under which these wages determining Authorities do coordinate and ensure that the principle of equal pay for equal work is kept in view and ensured.

17.11. Anomalies relating to Sixth CPC wage structure.

National and Departmental Anomalies have been constituted soon after the recommendations of the VI CPC were implemented. It was agreed that staff side would submit the list and details of these anomalies within 6 months and thereafter these committees would consider and settle these anomalies within a further period of six months. It was also agreed that unresolved anomalies would be referred to an Arbitrator appointed by the Government.

17.11.2. Most of these anomalies still remain unsettled or rejected by the official side. However the next step to refer these unsettled/rejected anomalies for Arbitration has not taken place. Referring these anomalies to the VII CPC on the same lines as was done on previous occasions i.e, V or VI CPCs would also be in fructuous. The V CPC declined to consider the IV CPC anomalies treating them out of their purview and the VI CPC said that whichever anomalies referred to them has been resolved in the form of upgrading the affected pay scales. They however stated that the revised pay scales would be applicable only with effect from. 1.1. 2006 and not from 1.1.1996 .We therefore request the VII CPC to ask Government through an Interim Report to refer all the unresolved anomalies for Arbitration for resolution within a period of next six months.

17.12.New Pension Scheme

The defined benefit scheme of pension also called ‘Pay as you go’ which is obtained even now in most of the countries was introduced in India replacing the existing contributory pension fund system decades back. The Government decision to reconvert this social security measure into a defind contributory scheme “New Pension Scheme” is not only going backwards but an illegal step in the light of the Supreme Court Ruling that Pension is as good as Right to Property and is enforceable.

17.12.2.The specious plea of the Government is that this has been done taking into account an emerging situation where out-flow on pension was bound to increase year after year and may become even higher than the total wage bill. But the avowed objective of denying a self financing NPS appears to have been defeated, as for the next about 35 years the expenditure on pension (which includes the matching contribution) and the liability towards existing and pension structure is bound to increase as could be apparent from the table given below.

The above study had submitted the following estimated pensionary outgo which tends to increase during the period from 2014-2038. It is only after 2043 that it starts declining and will be reduced to zero in 2088.

17.12.3. The above study had also pointed out that expenditure on pensions of civil servants of high income OECD countries on an average is 2% of GDP (less than 1% in Ireland and more than 3.5% in Austria*)(* Source: OECD Social Expenditure Database). But in the 8 South Asian countries it is less than 1% of GDP (Source: World Bank Data base). However, in India between 1964-65 and 2004-05 on an average pension payments (Civil Service pension paid by Central Government) have constituted 0.51% share of GDP. The Pension liability would continue to increase and reach 0.54% level by 2024-25 and remain at that level till 2014-25 after which they would decline as a percentage of GDP. These figures argue themselves in favour of continuation of the Defined Benefit Pension Scheme for all Central Government employees instead of throwing a section of them to market based NPS. According to 2011 census 62.8% are in the age group of 15 to 60 and only 8.2% are above the age of 60. 

17.12.4. From the above projection it is very clear that the benefit of NPS to Government will commence only after 44 years i.e. in 2044. And during the period it will increase exponentially as because in addition to the Statutory pension liability the Government will be contributing to the NPS also @ 10% of annual salary bill of the CG Employees who have entered service on or after 1.1.2004. 

17.12.5. It is quite surprising to note that the Government was in an unholy haste to introduce NPS despite the recommendations of a committee headed by Sri. Bhattacharya, the then Chief Secretary of Karnataka State to the effect that the Government should consider introducing a hybrid system by which employees will have either a defined benefit scheme or a contributory scheme. 

17.12.6. India is a young country and the expenditure on statutory pension has remained over a long period at not more than 5% of GDP which the country/Government can afford to spend. The scrapping of PFRDA Act is required for the following solid reasons: 

(a) The new pension scheme is going to make social security in old age uncertain and dependent on market forces. 

(b) The scheme has been compulsorily imposed on a section of employees and hence it is discriminatory. 

(c) Such scheme had been a failure in many countries including Chile, UK and even USA. In USA entire pension wealth has been wiped out leaving pensioners with no pension. In Argentina the contributory scheme which was introduced at the instance of IMF was replaced with the defined benefit pension scheme. 

(d) The PFRDA Act has provisions empowering the Govt. and the Authority to cover employees now left out and to amend the existing entitlements of pension benefits. 

(e) In majority of the countries, “pay as you go” is the system of pension. 

(f) The contributory scheme does not give any guarantee for a minimum pension of 50% of the pay drawn at the time of retirement of the employee. Nor does it provide for the protection of his family members in the form of family pension in the event of death. 

17.12.7.The Supreme Court had declared pension as one of the fundamental rights. The government should therefore retrace from its avowed position, which is detrimental to the interest of the employees and ensure that the employees recruited after 1.1.2004 is covered by the existing statutory defined benefit scheme and scrap the PFRDA Act.

17.12.8.The recent decision of the Cabinet to allow FDI in pension fund operations has made the real intent of the PFRDA Act clear. The FDI will facilitate the mutual fund operators to invest the funds outside India thereby making Indian Savings available for development of a foreign country. It is now clear that the decision behind the contributory pension scheme was the pressure imposed by IMF.

17.12.9. The VII CPC is requested to review the NPS in the light of the observations made above and recommend scrapping NPS and the PFRDA Act.

17.13. Special Increment for acquiring higher qualification.

In the changed work environment, Government must encourage its employees to acquire higher qualifications. The scheme presently in vogue covers only a few at the top. In our opinion this should not be restricted only for acquiring high professional qualification. We, therefore, suggest that any employee, who acquires an higher academic qualification beyond what is prescribed in the recruitment rules of the cadre in which he is presently working may be encouraged by grant of three special increments.

17.14. Special Amenities for Women employees at the workplace. 

We reiterate our earlier suggestion in the matter to provide, crèche round the clock, dress changing room, rest room, dining room and such other facilities at the workspot. 

17.15. National Holiday Compensation. 

In operational organisations, it becomes necessary in the national interest to deploy personnel on duty on National holidays. The system of providing them compensatory off on some other days has become unworkable. We, therefore, suggest that they must be compensated for their work on National holidays by a day’s salary and made entitled for all personnel iorrespective of the status and emoluments.

17.16. Insurance coverage for personnel posted in hazardous places.

The Government employees are deployed to work in remote areas, inhospitable areas, extremist infested areas and disturbed areas. These areas do not remain as such for a very long period, though exceptions are there. We suggest that the employees who are deployed to function from these areas may be provided with the insurance coverage.