CPSE 3rd Pay Revision: The applicability of Affordability Clause

 (Annexure to DPE OM
No. W-02/0028/2017-DPE (WC)-GL-XIII/17 dated: 3rd August, 2017)

The applicability of affordability clause in respect of certain types of CPSEs
is given at Annexure II

Annexure II (Para 5) 

Affordability to certain types of CPSEs: 

a) In respect of Sick CPSEs referred to erstwhile Board for Industrial and Financial  Reconstruction (BIFR) / Appellate Authority for Industrial and Financial Reconstruction (AAIFR), the revision of pay scales should be in accordance with rehabilitation packages approved by the Government after providing for the additional expenditure on account of pay revision in these packages. 

b) The affordability condition shall also be applicable to the CPSEs registered under Section 25 of the Companies Act, 1956, or under Section 8 of the Companies Act, 2013 (which by the very nature of their business are not-for profit companies) for implementation of the revised compensation structure (including Performance Related Pay) as being recommended for other CPSEs. 

c) There are also certain CPSEs which have been formed as independent Government companies under a statute to perform a specific agenda / regulatory functions. The revenue stream of such CPSEs are not linked to profits from the open market in a competitive scenario but are governed through the fees & charges, as prescribed and amended from time to time by the Government. There is no budgetary support provided by the Government to such CPSEs. In consideration that the impact of the revised compensation structure (including Performance Related Pay) would supposedly form the part of revenue stream for such CPSEs, the affordability condition shall not be applicable to these CPSEs; however the implementation of same shall be subject to the approval of Administrative Ministry upon agreeing and ensuring to incorporate the impact of the revised compensation structure into the revenue stream. 

d) As regards the CPSEs under construction which are yet to start their commercial operations, the implementation of pay-revision would be decided by the Government based on the proposal of concerned Administrative Ministry and after consideration of their financial viability. 

e) In case of Coal India Limited (CIL), the holding company and its subsidiaries would be considered as a single unit for the affordability clause as per past precedent. 

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