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Cabinet approves up to 96% pay hike for PSU executives

New Delhi, Fri, 21 Nov 2008 NI Wire

Just three months after approving the Sixth Pay Commission recommendation, the Union Cabinet on Thursday (Nov 20) agreed another pay revision, but this time for Central Public Sector Enterprises (CPSEs), which salary revision was not recommended by the Commission.


M J Rao committee had presented the recommendation of CPSEs board level employees’ pay revision before the Committee of Secretaries (CoS) that approved and forwarded it to the Union Cabinet.

According to the approved pay revision, as much as 3.78 lakh top level employees including Chief Managing Directors (CMDs) and Directors of Board will be benefited from this pay hike. There are 2.58 lakh executives and 1.2 lakh non-unionised supervisors work in 217 CPSEs of whose existing total salary bill stands Rs.13,000-crore per annum while after implementation of new hike, an additional payout of Rs.9,000-crore will be added in companies’ exchequer as government has already clarified that ‘only corresponding companies will bear the revised salary of their employees’.

Introducing Performance Related Pay (PRP), the Rao committee had suggested five pay scale category: A+, A, B, C and D, but cabinet has approved existing level of categories: A, B, C, D that denotes: A for higher profit making, B for profit making, C – less profit making and D for non-profit making companies.

According to first PRP salary structure, the pay hike would be done only for profit making companies and those running in the huge profit may implement this latest approved pay revision immediately, while others can implement it when the companies will come in the profit zone. Thus, at present the employees of only 76 massive profit making companies can get the benefit of this second pay revision committee’s recommendation immediately while only 151 out of 217 can implement it into phased manner depending upon their growth as only 151 companies are running with profit.

The pay hike for marginal profit making CPSEs is case specific depends upon their performance and it can vary from 10% to 20% of existing pay plus dearness allowance (DA) while for profit-making CPSEs, the fitment is a uniform 30% plus DA.

As per approved PRP, the new pay scale of A level CMD has been raised to Rs. 80,000 - Rs. 1,25,000 from existing Rs. 27,750 - Rs. 31,500, the Director of A level will get Rs. 75,000 - Rs. 1,00,000 as against the current Rs. 25,750 - 30,950.

Similarly, the new salary structure of B level CMD has been increased to Rs.75,000 - Rs.90,000 from Rs.25,750 - Rs.30,950 while Director of B level will get a basic salary in the range of Rs.22,500 - Rs.27,300.

The salary structure of CMDs for C level and D level companies has been raised to Rs.65,000 - Rs. 75000 (against the existing Rs.22,500 – Rs.27300) and Rs.51,300 – Rs.73,000 (from current Rs.20,500 – Rs.25,000) respectively, while the Directors of C and D level companies will get revised salary of Rs.51300 – 73000 (from 20500 – 25000) and Rs.43,200 – Rs.66,000 (from present Rs.18,500 – Rs.23,900) correspondingly.

Thus, we can say after implementation, the new salary of A level CMDs and Directors will surpass the salary of Indian president. Besides this basic salary structure, other incentives, perks, increments, house rents and allowances will be applied on the revised salaries.

According to revised salary structure, there is an average of 96% hike of all employees’ salaries in which the CEOs of profit-making CPSEs will get 300% more while the other board level and below board level employees will receive up to 200% performance-related pay.

The new salary would be effective from January 01, 2007, so the employees will also get thick arrears.

In other increments, employees will get one additional increment at every two achieved increments besides a uniform rate of annual increment and stagnation increment – calculated upon 3% of basic pay.

However, the payment of house rent allowance (HRA), perks and allowances based on the revised scales will be effective from the date of issue of the Presidential Directives, said Prithvi Raj Chavan, Minister of State in Prime Minister Office. The government will also form an ‘anomalies committee’ for resolving the grievances regarding new pay scales and its implementation, added Chavan.

Moreover, the limitation of the gratuity payment has also been hiked and it would now reach to a maximum of Rs.10 lakh as against existing Rs.3.5 lakh. In addition, all Board-level Executives, Executive Directors and General Managers will get a car each from their companies.

The PMO office has also informed that the compensation package of the 12.36 lakh unionised workers of CPSEs would be decided later through negotiations with respective company boards.

There are as many as 247 CPSEs, of which 217 are in operation where more than 16.14 lakh are employed including over 12.36 lakh unionised workmen, sources said.


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