Friday, 8 April 2016

Innovative approach: 50 percent of 7th Pay commission arrears to be invested in bond

Innovative approach: 50 percent of 7th Pay commission arrears to be invested in bond 

The government is considering an innovative proposal under which 50% of increased salary of higher-income government staff under the Seventh Pay Commission will be compulsorily invested in bank capitalisation bonds. The proceeds will be used to recapitalise banks without additional pressure on the fiscal.

While this will result in less cash in the hands of higher-income employees, as a sweetener they will get income tax rebate on the amount invested. Those wanting to invest more than 50% to save tax will be allowed to do so. The Bank Recapitalisation Scheme, as this proposal is being called, will be voluntary for employees with lower salaries (those in the Rs 5,200-20,200 bracket) and pensioners.

A finance ministry official confirmed that preliminary discussions around this proposal were held at a meeting on A finance ministry official confirmed that preliminary discussions around this proposal were held at a meeting on Thursday, but no decision on its implementation was taken. “The issue was discussed. We are looking at all options,” he said.

“The proposal entails that through a provision under Income Tax Act, tax rebate should be offered to all employees receiving extra salary income through pay commission in the year 2016-17 and 2017-18, provided the money is invested in this Bank Recapitalisation Scheme,” added the official.

The government will have to additionally shell out Rs 40,000-50,000 crore annually on account of implementation of the seventh pay commission recommendations with effect from January 1, 2016. If this proposal is accepted, a portion of this money will be used to capitalise banks. According to finance ministry estimates, state-run banks will require Rs 1.8 lakh crore of additional capital in the next four financial years, of which Rs 70,000 crore will be provided by the government.

The government has budgeted Rs 25,000 crore for bank capitalisation in the current fiscal. While the government has said it has made adequate provision in the Budget to cover the extra spending on account of the pay commission recommendations, analysts reckon it is not adequate and full implementation of award will make it difficult to achieve the fiscal deficit target of 3.5% of GDP.

“Increase in government employee wages and pension expenditure on account of seventh pay commission recommendations is not fully provided for in the Budget,” Morgan Stanley had said in a report.

The proposal currently under consideration gives the government the leeway to meet both its pay commission and bank capitalisation commitments without putting the fiscal deficit target under threat. Bonds will provide the exchequer some wriggle room. The payment will become due when bonds mature, leaving the government with only the interest payment liability in the current fiscal.

The flip side is that the proposed scheme could annoy government employees expecting a greater take-home pay. Hence the scheme has a tax exemption lollipop.

A second government official said this amount will be used to recapitalise banks through a special bank capitalisation fund that will invest in perpetual non-redeemable preference shares issued by banks. Banks will pay 5.1% dividend that is also proposed to be exempted from the dividend distribution tax. The fund will in turn pay 5% interest to government employees, retaining 0.1% as administrative charge.

“This interest income will also be tax free for government employees,” he said, which will increase the effective yield. The government will eventually pay back the amount in four equal investments after 8, 9, 10 and 11years, spreading the fiscal burden of repayment over that period. It will guarantee payment of 5% interest and repayment of deposits irrespective of whether the banks pay the dividend or not, the official added.

Source: ET

Central Government Employees get 6 per cent DA hike from January 1

Central Government Employees get 6 per cent DA hike from January 1

Dearness allowance for central government employees has been hiked to 125 per cent of basic pay, up by 6 percentage points, with effect from January 1, 2016, the Finance Ministry said today.

Dearness Allowance payable to central government employees shall be enhanced from existing rate of 119 per cent to 125 per cent from January 1,2016,” according to a Finance Ministry office memorandum bringing into effect the DA hike announced last month.

The decision to release an additional instalment of DA to central government employees and Dearness Relief (DR) to Pensioners from January 1, 2016, was taken by Union Cabinet on March 23.

The combined impact on the exchequer on account of both DA and Dearness Relief would be of Rs 6,796.50 crore per annum and Rs 7,929.24 crore respectively, in 2016-17 (for a period of 14 months from January, 2016 to February, 2017).

The DA will benefit 50 lakh central government employees and 58 lakh pensioners.

Dearness Allowance is paid as a portion of basic pay of employees to neutralise the impact of inflation. Pensioners get Dearness Relief.

The Centre revises DA twice a year on the basis of one year average of retail inflation for industrial workers as per a pre-determined formula.

In September last year, DA was increased to 119 per cent from 113 per cent with effect from July 1, 2015. In April last year, the government had hiked DA by 6 percentage points to 113 per cent of the basic pay with effect from January 1, 2015.

PTI

DoPT Order: Discontinuation of Interview at Lower Level Posts

F.No.39020/09/2015-Estt.B
Government of India
Ministry of Personnel, Public Grievance and Pensions
(Department of Personnel and Training)
Estt. B Section
Discontinuation of Interview at Lower Level Posts

The Prime Minister in his address to the nation on the Independence Day has stressed the need to discontinue holding interviews for recruitment for such junior level posts where personality assessment is not an absolutely necessary requirement.

He has called upon the Government Organizations’ to end this practice at the earliest as it will help in curbing corruption, more objective selection in transparent manner substantially easing the problems of poor people.
He has emphasized that the recruitment should be made on merit basis through transparent, online processes leading to less Government and more Governance.

The Department of Personnel and Training on the basis of recommendations made by the Committee of Secretaries has already taken a decision to discontinue interviews at the junior level posts at Group ‘B’ (Non-Gazetted), Group ‘C’ ,Group ‘D’ (which are now reclassified as Group ‘C’) and all equivalent posts.
All the advertisement for future vacancies will be without the Interview as part of the recruitment process.

From 1 st January 2016 there will be no recruitment with interview at the junior level posts, in Government of India Ministries/ Departments/attached Office/Subordinate Office/Autonomous Bodies/Public Sector Undertakings.

The interviews will be done away even in cases where the selections were made purely on basis of performance in the interview. The inistries/Departments/Organizations’ will consider revising the scheme for selection or such cases.

As the Skill Test or Physical Test is different from Interview they may continue. However these tests will only be of qualifying nature. Assessment will not be done on the basis of marks for such tests.

The decision to discontinue interview for the junior level posts across the country will be major step towards achieving the objectives of citizen centric transparent governance.

The matter has also been taken up with the State Governments/UTs to undertake similar exercise, from time to time. In this regard letters from Secretary (Personnel) to the State Chief Secretaries have been issued on 4th September 2015 and letters from MoS(PP) to the State Chief Ministers have been issued on 29 th September 2015 and 1 st January, 2016.

To facilitate the implementation of the directions of the Hon’ble Prime Minister further by the various Organizations/Ministries/Departments/Governments a one day workshop was also organized by the DOPT on 16th November 2015.

Some of the State Government have shared the status in this regard with the DOPT.

The Summary of the State Responses on the Discontinuation of Interview is as follows:

Daman & Diu, Dadra and Nagar Haveli No interviews in Group B (non gazetted), C and D posts. They have issued a recruitment pattern.
Gujarat Government of Gujarat has informed that the State Government had implemented the policy of cancellation of interview in the direct recruitment, on the lower level posts.
Haryana No interviews at Group ‘D’ level
Himachal Pradesh There is a proposal to discontinue interview for Group C and Group B Posts
Jharkhand No interview in ‘D’, ‘C’, and ‘B’ (non-gazetted)
Karnataka Government of Karnataka has informed that the State Government has discontinued the procedure of conducting interview for selection to Technical and Non-Technical Posts in Group-C category, in the Government
Kerala At present no interview are there for group ‘C’ and ‘D’ posts and even for some of the gazetted posts.
Maharashtra Interviews for the recruitment of the clerks have been discontinued. For Class 2 non-Gazetted, Class 3 and 4 posts, interviews have been done away. The State Government has taken a decision and issued directions to the effect that the direction of discontinuation of Interview will also be applicable to all State Government undertakings and local bodies. About 61% of the recruitment is done without interview.
Manipur It was informed that the State Government had undertaken the recruitment of Graduate Teachers under the Rashtriya Madhyamik Sikhsha Abhiyaan (RMSA) without conducting interview. This measure was successfully undertaken and was completely transparent and corruption free. It was informed that the second pilot measure in this regard is being undertaken by the Health Department.
Puducherry Notification for discontinuation of interviews for Group C, D, and nongazetted Group B has been issued.
Punjab Some of the Departments have already implemented the decision and that there has been no problem with completely doing away with interviews for the posts of SDO in Irrigation Department, Senior Assistant in Secretariat and for a few lower level posts in Agro Industry Department.
Rajasthan The representative from Rajasthan informed that interviews have been discontinued in some posts and retained in some of them. For Class 3/Ministerial staff and Group D/Class 4 level recruitment, there have been no interview. Similarly for Constable, there have been only written test and physical test. The interviews have been dispensed away for all the posts under the Rajasthan Education Service Rules, 1970.
Sikkim For Group D/Class 4 level posts there are no interviews. At Group C/III level, for 90% of posts there are no interviews.
Telangana Teachers — no interviews
Tamil Nadu The recruitment is done by the following four recruitment boards and the status vis-a-vis conducting the interview is as follows:- 5) Uniform Services Board- No interview

6) Medical Services Board- No interview
7) Teachers Recruitment Board- No interview
8) Tamil Nadu Public Service Commission (TNPSC) — has assorted posts in which there is some degree of posts with interviews.
In the State 85% of the total posts do not have interview as a part of recruitment process.
Uttarakhand The state Government has abolished interviews in the group ‘C’ and ‘B’ (non gazetted). There has been no interview in Class 3/4 levels of posts.
Uttar Pradesh No more interview for teachers.

DoPT Circular

Good News for Pre-2006 Pensioners – Indian Military Info

This article has been written by Indian Military Info in the backdrop of recent orders of Department of Pension for granting full Pension for Pre 2006 Pensioners with less than 33 Years

Good News for Pre-2006 Pensioners – Indian Military Info article on comparison of Ministry of Personnel and Defence Ministry in dealing with Pension issues

Most readers would be aware that the orders regarding calculation of pension of pre-2006 retirees based on minimum of pay within the pay band for each separate grade/rank and not on minimum of the pay band itself, with arrears from 01-01-2006 rather than 24-09-2012, were issued for Central Government pensioners in July 2015 by the Government as per the decision of the Delhi High Court, which essentially followed a decision of the Punjab & Haryana High Court, and then upheld by the Supreme Court. The High Court had held that the anomaly (though later removed by the Government itself from 24-09-2012) had to be removed from the date of the inception of the anomaly, that is, 01-01-2006. Similar orders were later issued by the Ministry of Defence.

On a similar analogy, many decisions by various Benches of the Central Administrative Tribunal (and then upheld by the High Courts) were rendered de-linking the service requirement of 33 years for grant of full pension for pre-2006 retirees at par with post-2006 retirees for whom there is no such requirement. Some Special Leave Petitions preferred by the Government against such orders were also dismissed, though not by way of detailed decisions. The Punjab  Haryana High Court had also passed a detailed verdict on the same subject for pensioners of the Central Armed Police Forces. Till date, the pensions of pre-2006 pensioners with less than 33 years of service (including weightage) were being calculated by way of proportionate reduction.

Through this earlier post dated 22-01-2016, in view of multiple queries in this regard, I had informed by way of general information that the matter of issuance of orders on this subject for similarly placed retirees was being examined by the Department of Pensions & Pensioners’ Welfare, Ministry of Law & Justice and Ministry of Finance.

The Department of Pensions and Pensioners’ Welfare has now issued universal orders giving effect to the judicial decisions of the High Courts and has removed the requirement of 33 years service for full pension. Now, irrespective of length of service, all pre-2006 pensioners shall be eligible for full pension as is admissible to those pre-2006 pensioners who had rendered 33 years or more service including weightage. Full arrears are also admissible with effect from 01-01-2006. The biggest gainers would be voluntary retirees and those released from service on medical grounds or before completing full service. Similar orders should now be issued for defence pensioners also by the Ministry of Defence.

A word of caution- This change would not affect the concept of One Rank One Pension (OROP) applicable with effect from 2014 since while this development is based on 50% of minimum emoluments introduced by the 6th Central Pay Commission for each grade, the concept of OROP is based on live data of actual pension based on real time emoluments as per length of service of in-service personnel. Readers are hence requested not to mix up the two dispensations which operate by way of separate dynamics.

We must again place on record extreme gratitude to the Department of Pensions and Pensioners’ Welfare functioning under Ministry of Personnel, Public Grievances & Pensions which has once again taken a stand for all Central Government pensioners and ensured issuance of universal directions just on simple dismissal of a Special Leave Petition by the Supreme Court even without a detailed order. One cannot also help but compare this with the attitude of the Ministry of Defence which continues to file appeals against its pensioners and disabled pensioners based on artificial distinctions even when the law has been fully settled by the Supreme Court in a plethora of detailed landmark decisions and which also militates against the grain of the opinion expressed by the highest of political executive, including the Prime Minister. I however maintain and retain full hope that the current Raksha Mantri would be able to rein in the unruly horses.

Jai Hind.

Source: Indian Military Info

MHA for Pay on Par with Army for Paramilitary

In its presentation before the ECOS, the MHA also batted for a ‘special pay’ on par with the army. The defence forces get a special allowance in the form of military service pay (MSP) over and above their salaries.

MHA for Pay on Par with Army for Paramilitary – While recommending a ‘CAPF service pay’, the home ministry said, “CAPF fulfills all attributes required for military service pay, which includes separation from family.

Drawing a parallel with defense forces, Rajnath Singh-led home ministry, has recommended equivalent pay for a second in command (2IC) in central paramilitary to that of a lieutenant colonel in the army. At present, there is a difference of Rs 40,000 in their salaries “despite operational role of both ranks being similar in nature,” the home ministry informed the empowered committee of secretaries (E-COS) in its recent discussion.

In its presentation before the ECOS, the MHA also batted for a ‘special pay’ on par with the army. The defence forces get a special allowance in the form of military service pay (MSP) over and above their salaries.

While recommending a ‘CAPF service pay’, the home ministry said, “CAPF fulfills all attributes required for MSP, which includes separation from family.

They are the key pillars of internal and border guarding, handle warlike situation and continuously engaged in operations.”

According to an MHA official, the proposal for a ‘CAPF special pay’ was earlier mooted before the 7th pay commission last year. However, it was shelved at the last minute.

He also stated that the CAPF has raised nearly 40 demands, which were examined at the MHA, before recommending 11 of them to E-COS.

While terming it to be a “great morale booster” for the forces, the home ministry in its recommendation also sought additional leave travel concession (LTC) for CAPF personnel serving in high altitude on par with defense forces that will “facilitate personnel to visit at least twice to their families on government cost,” MHA said in its representation.

Home ministry also sought to address the problem of stagnation among the paramilitary by proposing that modified assured career progression scheme (MCAP). It shall be allowed four times at an interval of 8, 16, 24 and 32 instead of 3 times at an interval of 10, 20,30 years. “At present, it takes 20-22 years for them to get their first promotion and this has also led officers to quit. As many as 9,300 personnel quit ITBP, CISF, SSB BSF, CRPF, due to non-friendly working conditions,” said an official.

The government also advocated for a better leave structure for the personnel who are deployed for counter-insurgency operations across the country.

Source: Economic Times

Centre notifies hike in dearness allowance to 125 % for Central Government Employees

Centre notifies hike in dearness allowance to 125 % for Central Government Employees

Centre on Thursday notified its decision to raise dearness allowance (DA) to 125 per cent from 119 per cent, benefiting its 48 lakh central government employees and 52 lakh pensioners.

The union cabinet had decided on March 23, to release an additional instalment of DA and dearness relief (DR) to pensioners with effect from 1 January 2016. Thus, the central government employees as well as pensioners are entitled for DA/DR at the rate of 125% of the basic with effect from 1 January 2016.

“…the President is pleased to decide that DA payable to central government employees shall be enhanced from existing rate of 119% to 125% with effect from 1 January 2016,” a finance ministry’s office order said.

According to the today’s Office Memorandum No.1/1/2016-E-II (B), the additional installment of DA payable under this order shall be paid in cash to all central government employees.

In regard to armed forces personnel and railway employees, separate orders will be issued by the ministry of defence and ministry of railways, it said.

The government has estimated that the combined impact on exchequer on account of both DA and DR would be Rs 14,724.74 crore per annum.

The burden on exchequer would be Rs 6,795.5 core towards central government employees and Rs 7,929.24 crore towards pensioners during 2016-17.

The Centre revised DA twice in a year on the basis of one year average of retail inflation for industrial workers as per the accepted formula.

Earlier in September last year, DA was increased to 119 percent from 113 percent which was effective from July 1, 2015.

In April last year, the government had hiked DA by 6 percentage points to 113 percent of their basic pay with effect from January 1, 2015.

The increase in DA is in accordance with the accepted formula based on the recommendations of the 6th Central Pay Commission.

However, the central government is going to start the 7th Pay Commission award in July, which will be effective from January 2016.

Flash News

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