Recommendations of VIIth CPC:Suggestions for Performance linked Incentive Schemes

 

The  VII CPC has examined the status of performance related incentive schemes presently in practise on basis of recommendations of the VIth CPC in Chapter 15 of the report and made certain important suggestions.

Tracing the evolution of such incentives it has referred to the report of 2nd Administrative Reforms Commission which had visualised such incentives as a prerequisite for an effective governance system. The issue was taken up by Vth and VIth CPC as a tool for providing incentive for effective Administration.The Scheme formulated by VI CPC covered organisations as well as individuals.

The previous Pay Commission had made the implementation of  the Scheme optional for the various units after taking into consideration the difference in functional scope of various units of Government. The implementing Departments had to draw a roadmap of activities and harmonise the same with individual achievements. It had added the condition of Departments having prepared a Results Framework Document (RFD) for two preceding years, and also several additional measures such as developing IT based attendance and performance monitoring systems.

The recommendations had failed to make  major impact in face of difficulties in making requisite budgetary provisions, absence of clear performance evaluation parameters and aberrations such as high achievers caught in mediocre environments. The Commission has also noted the failure of earlier schemes of Performance Linked Bonus (PLB) conceived for Govt. Servants due to absence of clear, quantifiable targets and performance evaluation of any individual.

The Commission in it’s report has pointed out that in public services the objectives are not quantifiable in monetary terms like private sector organisations.The task of laying down the parameters for performance evaluation and reward for different services and Government Departments is therefore rather complex. However there are precedents in other countries where such schemes for incentivising good performers through objective criteria have been implemented with success. Some countries have evolved separate set of norms for senior civil servants and junior functionaries.

Considering all factors the CPC has observed that exercise for evolving a system for performance based rewards should be preceded by proper understanding of the system, adequate planning and capacity building at various levels.The vagaries of Govt.functions makes it impossible to devise a common performance based incentive Scheme. The Commission has suggested simple and effective schemes which should have common features for the Department. It has been suggested that the reward system should be an annual feature and should not be linked to savings effected by the employee.

In conclusion the Commission has recommended introduction of Performance Related Pay for all categories of Central Government employees, based on quality RFDs, reformed Annual Performance Appraisal Reports and broad Guidelines.The Performance Related Pay should subsume the existing Bonus schemes. The Commission notes that there could be a time lag in implementing the Performance Related Pay by different Departments.In the interim period the Ministries and Departments can review the existing Bonus Schemes and create linkage  with increased profitability/productivity with definite parameters.

Another important suggestion made by the CPC pertains to weightage to be given for in the APAR to personal attributes of the public servant in comparison to his performance in achievement of results.The Commission feels that it should be in ration of 40:60 instead of current  ratio of 60:40.

It has also strongly pleaded for fixation of definite time frame for drafting, reviewing and finalising  RFDs .It would also be necessary that these timelines get synchronised with the preparation of the APAR ..”so that the targets set under RFD get reflected in individual APARs in a seamless manner.”

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VIIth CPC Recommendations for the Defence officers cadre

The country has around 47 Lakh Central Govt Employees out of which  there are 14 Lakh defence service personnel constituting around 30% of total strength .In the Army, the officer cadre comprises of  the two functional branches viz., Arms and Services.The bulk of the officers are at the lower end of the pyramid, with significantly smaller numbers at the vertex.

The Indian Navy Officers’ cadre comprises officers from the Executive, Engineering, Electrical and Education branches.

The officer cadre in the Indian Air Force consists of Flying Branch and Ground Duties Branches (Technical and Non-Technical). The Army Medical Corps (AMC) and Army Dental Corps comprise Medical/Dental officers as well as Non-Technical officers

The Pay Commission was confronted with the issues relating to persisting shortage in the ranks of officers which is currently around 23% and the consequential need for cadre review.While considering the comparative pay scales the Commission noted that after recommendations of previous CPC the starting pay of a defence officers is about 29 percent higher than his/her civilian counterpart.This gap remains wide for first nine years of service (over 20 percent) .In fact the pay of defence service officers remains uninterruptedly higher for a thirty-two year period and only thereafter pay of defence and civil service officers are at par.

In addition to higher pay the defence service officers are better placed with benefits like  (a) free rations or ration money allowance in lieu of free rations (b) tax concession available in Canteen Store Depots (c) military concession vouchers for travel in Railways and by air (d) free electricity upto 100 units each month (e) concessions on water charges.

The CPC made  comparative analysis of pay structures of armed forces in USA & UK with pay scales applicable to Indian Army and noted that “…….. defence service officers and JCO/ORs in India, based on VI CPC pay scales, are placed quite well in terms of pay, even in relation to defence personnel in countries like US and UK, where the GDP per capita in PPP terms for the country as a whole is significantly higher than that of India”

Major decisions taken by the Commission are to the effect that  there is no case for revision in the structure of Grade Pay by taking Rank Pay into consideration while determining the top of the pay scales of certain ranks and no change is warranted in the manner of pay fixation for Lt. Colonel/Colonel and  Brigadier/equivalent.

Considering the submission that grant of NFU to Organised Group ‘A’ Services in Ministry of Defence  has created command, control and functional problems the Commission had recommended for extension of NFU to the officers of the Defence forces and CAPFs (including ICG) as well.

However several suggestions made by Services in joint Memorandum such as those relating to pay fixation for re employment of officers and select promotion schemes have not been agreed to. These would remain in accordance for rules for Central Govt employees.The Commission  has also not found any justification in further scaling up all Lieutenant Generals to the HAG+ grade.

For the Short Service Commissioned Officers the Commission it has been recommended that the SSC officers should be allowed to exit at any time between seven years and ten years of service instead of the existing exit option at ten and fourteen years. The option for permanent commission should be exercised in the seventh year, instead of the tenth year as it exists today. As package for those exiting the Commission has recommended Terminal Gratuity at uniform 10.5 months of reckonable emoluments, for exit any time between seven years and ten years.

In order to facilitate their rehabilitation, the Commission has recommended that such officers be provided benefit of Fully funded (a) one year Executive Programme at premier management institute or (b) M. Tech programme from premier technology institute as well as Concession towards Civil Service Examination by way of relaxation in age by five years.

For the Junior Commissioned Officers the CPC has not agreed to the demand for a common pay scale.Demands pertaining to review of pay scales of JCOs /ORs have also not been agreed to by the VIIth CPC.

Services had sought a review of pay scales of JCOs/ORs in certain select categories with the objective of enhancement of their Grade Pay with the objective of  bringing  them at par with their civil counterparts. This demand has been not accepted by the CPC  citing the fact that the personnel already enjoy advantages such as Military Service Pay.The Commission has not agreed to disturb the relativities between sepoy and constables in CAPF.

The Commission has recommended  an  exercise for standardisation under which all X trades should mandatorily involve obtaining a qualification which is equivalent of a diploma in engineering (recognised by AICTE).

Several other demands such as change in packages for Havildar / Naib Subedar and modifications in MACP have been turned down.

For Honorary Commissioned Officers the Commission has recommended that the Junior Commissioned Officers on their promotion as Honorary Lieutenant or Honorary Captain shall be placed in the pay level 10 and pay level 10B respectively. They will, in addition be paid Military Service Pay of ₹15,500 per month on par with that payable to all the Commissioned officers.

Other important recommendations include benefit of of MSP for non combatants .For Air Force it recommended increase in MSP from pre existing Rs. 1000/-to Rs.3600/- per month.

Regarding Military Service Pay as indicated in previous writings it has been held that the the same will be  available only to Military Service Personnel upto rank of Brigadiers and the present structure has been held to be acceptable for future also.

Lateral Movement/Resettlement of Defence Forces Personnel is another important area covered in this chapter It has been recommended that the primary focus of the Government with regard to lateral entry as far as CAPFs are concerned should be on personnel retiring from the ranks of Sepoys (& their equivalents), who may be asked to opt for continuation or lateral movement in CAPF after seven years of service . The personnel in cases of such lateral movement be given due pay protection (however MSP shall not be admissible on such lateral movement). As compensation the personnel may be given lump sum payment @ 10.5 time of last pay drawn.After serving in CAPFs they shall continue upto the retirement age and be covered in so far as their pensionary benefits are concerned under the New Pension system.

CPC has also recommended for facilitating lateral entry of retiring defence forces personnel to Defence Civilians organisations like Ordnance Factories, DRDO, Naval Dockyards, Military Engineering Service, Border Road Organisation, Base Repair Depots etc. and desired that this option should be available for all defence forces personnel, irrespective of the number of years of service.

Commission has suggested far fetching reforms  in the institutional framework with use of IT in matching the available database on retiree work force with the market forces and sought synergising out put of all agencies involved in welfare of ex army personnel through intervention and control of Central Govt.

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Seventh CPC: How the package for Armed forces was worked out

While making recommendations for Armed forces the CPC had held consultations with the Ministry of Defence, the Defence Services, the Department of Ex-Servicemen Welfare, the Controller General of Defence Accounts. It has taken note of the demand from The Defence Services, in their Joint Services Memorandum, that the emoluments in the Defence Services should stand a fair comparison with the emoluments in Civil Services, in order to ensure  legitimate share of the available talent pool. The CPC also commissioned a study with the Institute for Defence Studies and Analyses (IDSA) as an independent expert agency dedicated to research and policy in defence and security on “Nature, Quantum and Components of Defence Expenditure and Defence Pensions. The study covered pattern of defence expenditure in India (1995-96 to 2013-14) and other important countries.

Comparing the defence expenditure as a percentage of GDP it was noted that Defence Expenditure as a percentage of GDP has declined from 2.19 percent in 1995- 96 to 1.80 percent in 2012-13. Also as a percentage of Central Government expenditure it has declined from 14.50 percent in 1995-96 to 12.89 percent in 2012-13. However Defence capital expenditure as a percentage of total defence expenditure has shown an increase from around 25 percent in later half of the 1990s to over 40 percent in the recent years.

The report indicated that considering  expenditure on procurement and infrastructure as percentage of defence expenditure India ranks at the first place among the ten countries covered by the study. Unlike some European countries Russia, India (from 27.55 percent in 2007 to 41.12 percent in 2012), and Pakistan witnessed the sharpest increase in share of expenditure on personnel as a percentage of defence expenditure between 2007 and 2012. The hike has been explained by the fact that Indian Armed forces are labour intensive and the increase in pay scales by VIth CPC is the major influencing factor.The Commission has stated that it has tried to strike a balance between capital and revenue expenses for the defence forces.

Besides ensuring pay structure comparable to Civil Services the CPC has also attempted to compensate for the hardships involved in Military Service by recommending continuation of Military Service Pay upto rank of Brigadier and equivalent and other allowances to compensate for risk and hardship borne by defence service personnel.It has also recommended a  defined benefit pension scheme, which entails no contribution as distinct from a defined contribution scheme which entails a monthly contribution by each official as applies to all other Central Government personnel.

The Commission has asserted that the Military Service Pay, which is a compensation for the various aspects of role performed by Armed Forces and has historically provided the edge to the Defence Forces over the civilian scales,  will be admissible to the Defence Forces personnel only. The Commission has reiterated that  the intangible aspects linked to the special conditions of military service set the Armed Forces apart from civilian employees.

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