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Reasons for Steady Decline in PIP in Recent Years

3.34 The primary reason for the steady decline in the personnel strength of the Central
Government, other than in Ministry of Home Affairs/Police, are the guidelines issued by the
Department of Personnel and Training in May 2001 on optimisation of direct recruitment to
civilian posts, which were in operation from May 2001 to March 2009. As per these guidelines
fresh recruitment was to be restricted to one percent of total civilian staff strength and with
three percent of staff retiring each year the manpower reduced by two percent per annum. The
objective was to achieve a reduction of 10 percent in staff strength in five years.
3.35 The impact of the instructions on optimisation of direct recruitment to civilian posts was
reviewed in the Report of the VI CPC. It made the following recommendations in para 6.3.10
of its report: The Commission has recommended multiskilling of the government employees
which would increase their operational efficiency while simultaneously optimising the staff
strength. It is, however, noted that while rightsizing in government is necessary given the
changes in work process due to technology and consequent reduction of layers, a blanket ban
on filling of vacant posts across the board can impact effective functioning. More flexibility is
required in this policy for effective service delivery and care has to be taken that administrative
delivery structures do not become hollow or thin in critical areas. It is, therefore, essential that
the government revise the Annual Direct Recruitment Plan (ADRP) in terms of which only one
third of the vacancies can be filled up. This instruction has resulted in an aging bureaucracy
which does not easily adapt itself to technology. An active and younger profile in government
employment is the need of the hour. Further, strengthening of the cutting edge for efficient
delivery is required. New guidelines, where reduction in manpower and levels of fresh
manpower intake would be assessed and prioritized by the individual ministry or department
keeping its work processes, service delivery and functional requirements and budgetary
savings at centre stage should, therefore, be issued.
3.36 Based on this the government decided, in 2009, not to extend the Optimisation Scheme.


3.82 The Commission is also of the view that a database should be available with the
government which can enable it to draw upon high level retiring personnel, who have the
required capabilities to be utilised through contractual appointments.

Retiring personnel in a number of ministries/departments are substantial and this

presents two sets of implications. At one level losing experienced high level
personnel entails unquantifiable costs as new recruits will require training and on
the job skills. At the same time it presents ministries/departments the opportunity
to align their personnel requirement in line with their current and future

The Commission is of the view that a clear guidance from the government on jobs
that can and should be contracted out would be appropriate. While doing so the
concerns of confidentiality and accountability may be kept in view. Further, to
bring about continuity and to address the concerns regarding exploitation of
contractual manpower, uniform guidelines/model contract agreements may be
devised by the government.
The Commission is also of the view that a database should be available with the
government which can enable it to draw upon high level retiring personnel, who
have subject matter knowledge, experience and skills to be utilised through
contractual appointments.


Modified Assured Career Progression (MACP)

5.1.44 Although a number of demands were received for increasing the frequency of MACP
as well as to enhance the financial benefit accruing out of it, this Commission feels that the
inherent issues in the existing pay structure owing to which there was widespread resentment
have been set right by way of rationalisation of pay levels, abolition of pay band and grade pay
Report of the Seventh CPC
82 Index

and introduction of a matrix based open pay structure. Hence, there is no justification for
increasing the frequency of MACP and it will continue to be administered at 10, 20 and 30
years as before. In the new Pay matrix, the employees will move to the immediate next level
in the hierarchy. Fixation of pay will follow the same principle as that for a regular promotion
in the pay matrix. MACP will continue to be applicable to all employees up to HAG level
except members of Organised Group `A Services where initial promotions up to NFSG are
time bound and hence assured.


5.1.49 The Commission, after its interaction with the authorities of Australia and New Zealand,
feels that India should also have a permanent Remuneration Authority that should review the
pay structure based on job roles evaluation, remuneration prevailing in the market for
comparable job profiles, general working of the economy, etc. within a given budgetary outlay.
With this, the pay structure could be revised periodically, at more regular intervals, say
annually, without putting an undue burden on the public exchequer every ten years, as is the
case now. Such a periodic review may have many possible fallouts: impact of revision of wages
could be easily absorbed in each years budget and quicker remediation of anomalies would
take place, leading to greater employee satisfaction. In the backdrop of annual revisions, the

present system of biannual revision of DA could also be dispensed with.

Civilianization of Military Engineering Service
11.12.41 The IDSE Association has made its case for the civilianization of the MES, citing the
example of UK, where the works services are stated to be civilianized. The recommendations
of the Estimates Committee of Parliament have also been cited in support of their demand.
Analysis and Recommendations
11.12.42 The Commission notes that the V CPC in its Report (Para 33.15) had specifically
taken the view that the Armed Forces need not divert their manpower to organisations like
Survey of India, Directorate General of Quality Assurance, DRDO, MES, BRO etc. There
should be a gradual civilianisation of all these organisations
11.12.43 The view of the Ministry of Defence, however, is that this is purely an administrative
issue and that the government can decide on manning of cadre as per operational and
administrative requirement.
11.12.44 The Commission has noted the views of the ministry. At the same the time it notes
the concerns regarding shortage of officers in the Armed Forces as has been articulated
forcefully in the Joint Services Memorandum (JSM) by the Services: shortages have
resulted in tremendous pressure on the other officers posted to the combat units which are
functioning with 50 percent strength of officers. Frontline leadership has been seriously
affected which is the key factor in war and other warlike operations including counter
insurgency operations.
11.12.45 This position brings out the need for the Armed Forces to focus on core functions
and the validity of the view taken by the V CPC. To that extent, the ministry may like to
review the matter.
The Commission observes that the current progression from GP 4600 to GP 4800
on promotion as Section Officer is an appropriate upgrade and does not find any
justification for placing the entry level to SO at a higher level. In so far as the
nonfunctional upgrade is concerned, in the newly restructured pay matrix the earlier
situation of a common grade pay i.e., 5400 prevailing in PB2 and PB3 has now been
rationalised. Accordingly, the non-functional upgrade will henceforth be from level
8 to level 9. In the case of all such cadres/services where non functional upgradation
is presently available across two levels, for example, from GP 4800 to GP 5400 (PB3) the same will now be available across only one level for example, from GP 4800
to GP 5400 (PB-2) or in the new matrix from level 8 to level 9.

The Commission took note of the issue of stagnation raised by the various
representative staff associations. Accordingly, the following is recommended:
a. The concerned ministries should earmark posts in Level 8 equal to 10 percent of
total sanctioned strength in Levels 6 and 7 to be filled from subordinate engineering
cadre personnel in Levels 6 and 7. 70 percent of such earmarked posts should be
filled through promotion from Level 7, while 30 percent should be filled through a
Limited Departmental Competitive Examination in which employees from both
Levels 6 and 7 would be eligible to compete. This will enable deserving and
meritorious employees at Level 6 to jump Level 7 and go directly to Level 8.
b. 80 percent of the employees in Level 8, will be eligible for non-functional upgrade
to Level 9 upon completion of four years in Level 8, on a seniority-cum-suitability
b. Composite Transfer and Packing Grant (CTG)The Commission notes that CTG is
payable to both serving as well as retiring employees upon their transfer at a similar
rate of one months Basic Pay last drawn. In line with our general approach of
rationalizing the percentage based allowances by a factor of 0.8, it is recommended
that CTG should be paid at the rate of 80 percent of last months Basic Pay.
8.17.17 On the whole, the Commission is of the view that quantum of CEA should be calibrated
in such a manner that the main objective is met without the government entering into the field
of subsidizing private education. Hence, taking into account the various items of expenditure
that are reimbursed as a part of this allowance, the following is recommended:
Component Recommended rate Remarks
CEA ( pm) 1500x1.5 = 2250 Whenever DA increases by 50%, CEA shall
increase by 25%
Hostel Subsidy ( pm) 4500 x 1.5 = 6750
Whenever DA increases by 50%, Hostel
Subsidy shall increase by 25%

The allowance will continue to be double for differently abled children.

What should be the scope of CEA? Presently CEA is payable up to Class XII. There is
a strong demand for increasing the scope to Graduate and Post Graduate studies.
However, due to the greatly varying nature of studies at the graduate level and beyond,
the extension of scope of the allowance beyond Class XII cannot be accepted.
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All India Consumer Price Index (Industrial Workers)

It is recommended that reimbursement should be done just once a year, after

completion of the financial year (which for most schools coincides with the
Academic year). For CEA, a certificate from the head of institution where the
ward of government employee studies should be sufficient for this purpose. The
certificate should confirm that the child studied in the school during the previous
academic year. For Hostel Subsidy, a similar certificate from the head of
institution should suffice, with the additional requirement that the certificate
should mention the amount of expenditure incurred by the government servant
towards lodging and boarding in the residential complex. The amount of
expenditure mentioned, or the ceiling as mentioned in the table above, whichever
is lower, shall be paid to the employee.

Interest-free Advances
9.1.2 Presently 12 interest-free advances are permissible. Their details are as follows:
Table 1: Interest-free Advances
S.No. Name Amount Eligibility Remarks
1 Bicycle Advance 4500 GP<=2800
Recoverable in
max 30 monthly
Warm Clothing
Advance 4500
All Group C
employees posted at a
hill station either on
first appointment or
on transfer, for a
period of not less than
one year
Recoverable in
max 12 monthly
Advance of Pay
on Transfer
1 months pay OR
2 months pay in case of
transfer due to shift of
HQ as a result of
government policy
All employees
transferred from one

station to another in
public interest
Recoverable in
max 3 monthly
Advance of TA
on Tour/
An amount sufficient to
cover the officials
personal travelling
expenses for a month or
six weeks in case of
prolonged tours
All cases where TA is
The advance
shall be adjusted
after completion
of tour
Advance of TA
to the family of a
Limited to 3/4th of
probable expenses
admissible under the rules
Same as for
6 Advance of LTC Up to 90% of the fare
All eligible Central
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S.No. Name Amount Eligibility Remarks

Advance of
Leave Salary
An amount not exceeding
the net amount of leave
salary including
allowances for the first 30
days of leave after
deduction of PF, House
Rent, Income Tax,

Recovery of Advances,
All officials
proceeding on leave
for a period not less
than 30 days
against the
monthly salary
Advance in
connection with
90% of the package deal
for specific major
10,000 for indoor
treatment or outdoor
treatment of 3 months or
less for cancer.
36,000 for treatment of
TB where duration is
more than 3 months
All Central
employees except
Railway employees
9 Festival Advance 4500 GP<=4800
Recoverable in
max 10 monthly
Advance in the
event of natural
calamity like
flood, drought,
cyclone, etc. 7500
All non-Gazetted
Recoverable in
max 12 monthly
Advance for
training in Hindi
Course 450
For those Central

employees who
undergo training
correspondence course
conducted by the
Central Hindi
Advance for Law
Suits 500
All Central
Recoverable in
max 24 monthly

9.1.3 There is a general demand from the JCM-Staff Side to increase all interest-free advances
to three times their present value.
Analysis and Recommendations
9.1.4 As can be seen from the table above, the amount of most of the advances is quite low.
With the increased salary packages provided after successive Pay Commissions, these
advances have lost their relevance. Hence, to do away with outdated provisions and thereby
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save on the costs involved in administering these advances, it is recommended that all
advances should be abolished.
9.1.8 Regarding other interest-bearing advances, the following is recommended:
Name of
Advance Recommended Ceiling Recommendations
50,000 or actual price
of PC, whichever is
May be allowed maximum five times in the
entire service.
34 times Basic Pay

25 lakh
anticipated price of
house, whichever is
The requirement of minimum 10 years of
continuous service to avail of HBA should be
reduced to 5 years.
If both spouses are government servants,
HBA should be admissible to both separately.
Existing employees who have already taken
Home Loans from banks and other financial
institutions should be allowed to migrate to
this scheme.
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