Wednesday, February 27, 2013

The Continuing Debate Over The IV CPC Pay-Scale

Calculations of arrears of pay on account of the IV CPC rank-pay issue have been, mostly, completed by the organisations responsible for disbursement of pay. The arrears have started trickling into the bank accounts of veterans. But questions and doubts remain about the correctness of the calculations done and the manner in which the judgement of the Hon'ble Supreme Court was interpreted by the government.
The queries heard most often are:
  • How will the judgement affect those who were not in service as on 01 Jan 86 and joined later?
  • Will the judgement have any bearing on pensions of those who retired before 01 Jan 86?
  • How will the basic pay be affected in the case of those Officers who got promoted to the rank of Captain after 01 Jan 86?
There is a common basis for such queries to have arisen. Paras 6, 7 and 8 of the Govt. of India letter dated 27th December 2012 form the very foundation of  these issues. The letter mentions only SAI 1/s/87 and is about refixation, and only refixation, of basic pay on 01 Jan 86, based on an outline, as included in the letter, of  the interpretation by the Govt of the judgement.
Serving officers and veterans need to look beyond the SAI and pose questions about the running pay scale introduced at the time of IV CPC. It is a classic chicken and egg question. Was the payscale, with its rank stages, based on the manner of calculation of emoluments or were the calculated emoluments fixed into the running pay-scale, the latter having come into existence by the decree of some higher power that governs our universe?
The detailed report of IV CPC would record how the running pay-scale was established. A couple of direct queries could begin to offer some clarity:
  • How is it that as per the calculation done for a Maj {as cited in the PCDA(O) example}, the revised emoluments came to 3555/- but the starting stage for the rank of Maj was fixed at 3400/- in the pay-scale?
  • What was the basis for defining the pay-scale and determing the rank stages? Which part, chapter and para of the IV CPC report records the basis of formulation of this pay-scale?
  • Does the IV CPC report specify exactly how the revised emoluments were to be calculated as on 01 Jan 86? If so, in which part of the report?
  • Did the litigation on the matter involve specific arguements for a change in the running pay-scale or did the judgement imply the running pay-scale would have to be altered for "giving" rank pay, retrospectively?
In case pensions of pre 01 Jan 86 retirees, basic pay of those commissioned, or promoted to Capt, post 01 Jan 86 are to be revised upwards, there would appear to be a need for a revision of the running pay-scale itself.
If commonality of principles is a consideration, the same treatment needs to be applied to the pay-scales at the time of V CPC as well. But more important than the issue of pay-scales at the time of V CPC would be a re-look at how a deduction of RP can ever be justified at the time of V CPC when it's deduction at the time of IV CPC has just been reversed by the Govt? But that's a different topic and can be looked at separately.
This follows from a previous blog post.    

Wednesday, February 20, 2013

How The IV CPC Arrears Calculation Measures Up Against Expectations

At the very outset, there is a need to identify the most basic factor in the reasonings put forth on blogs and chat-rolls, over the past couple of years, while anticipating the quantum of arrears due to be paid to armed forces officers, that has caused a 'shortfall' between the 'actual' and 'expected' arrears. The assumption centered on the argument that rank pay was part of basic pay and hence the revised emoluments for Jan 86 were required to be calculated using the formula :
Revised Emoluments = Unrevised BP+DA+IR+20% of Unrevised BP
+Rank Pay For Jan 86
The train of thought that followed from this assumption, flawed or otherwise, was that after adding the rank pay in this fashion, it had been deducted and the emoluments fixed at the appropriate stage, corresponding to the years of service, in the running pay-scale, in which the rank/years-of-service stages diluted the revised emoluments causing fixations at lower levels.
The above assumption certainly appeared logical from the point of view that considered Rank Pay to be part of Basic Pay and which required fixations based on parities vis-a-vis equivalent civilian posts, which in turn required a revision of the running pay-scale itself.
A large amount of speculation on these lines was further compounded by the lack of hard facts and information. This was, perhaps, partly due to the fact that the matter continued to be sub-judice till the very end and critical information relating to the litigation was hardly the sort of material that ought to have been put in the public domain.
So, it was always necessary to consider the most optimistic and pessimistic scenarios. As an example this lower estimate , made in this Blog on 07 February 2013, coincides almost exactly with Example 3 of Maj C as given in the Calculation Methodology of PCDA(O) Pune.

Similarly, the PCDA(O) Pune methodology meshes with the option illustrated with the green arrow in this blog-post dated 14 September 2013 2012.

The "shortfall" in the same example of Maj C arises only when one looks at the estimate of Rs. 4050/- in place of the now fixed amount of Rs. 3600/- and is caused solely on account of the widely shared assumption as stated in the opening para of this blog post.

The expectation that following the judgement, the IV CPC scale would be amended to establish correct inter-se parities vis-a-vis civilian posts hasve not yet materialised, but the cited error of the lower fixation of Rs. 3400/- in the example of Maj C has been totally corroborated now in the manner PCDA(O) have chosen to make the calculation.

The speculation that enhancements would not be applicable on subsequent promotions have also been upheld in the Example 2 of Capt B in the PCDA(O) methodology for the promotion case marked with an asterisk.

If further litigation or representation are planned, the re-defining of the payscale and method of calculating revised emoluments, at IV CPC and V CPC would perhaps be critical considerations.


Thursday, February 07, 2013

Guesstimates Of Rank Pay Arrears

Now that the pay disbursement authorities have started implementing their interpretation of the Govt. letter that, in-turn, interpreted the judgement of the Hon'ble Supreme Court on the Rank Pay case, there would be deviations from others' interpretations of the judgement or of the Government interpretations thereof, not to forget, from countless pipe-dreams and wishes of die-hard optimists who must have expected a bonanza of some description.
So, till the actual methodology of working out arrears becomes available in the public domain, one can but grope in the dark to snatch some reasonable estimate of what sort of inflows would result.
The one thing that appears fairly clear at present from the Govt. letter is that there's a strong possibility the re-working of emoluments would be guided by the following restrictions:
  • The re-fixation of BP, in the payscale, as on 01 Jan 86 would take place after reversal of the deduction, made at the time of IV CPC, of an amount equal to the rank pay applicable to the rank held by an Officer as on 01 Jan 86 eg the basic pay of a Maj fixed at 3400/- as on 01 Jan 86 could be refixed at Rs. 4050/- wef 01 Jan 86. Or, it might be as low as Rs. 3600/-.
  • Subsequent promotions would, probably, not entail a jump in BP equivalent to the rank pay of the next rank, though of course the higher rank pay would be applicable on promotion.
  • There would be no revision of the deductions of rank pay made at the time of V CPC. However, as the BP for Dec 95 would be higher due to revision of basic as on 01 Jan 86, the BP wef 01 Jan 96 might have to be refixed upwards by an amount equivalent to one increment in the V CPC scales.
However, it is not certain how the disbursement and audit agencies might choose, unless they have already chosen, to further restrict the dues of those affected. Just taking the bare minimal case of the Maj stated above, ideally, the arrears, for just the duration of IV CPC, ought to be on the lines estimated as follows:

Original BP Fixed For Maj On 01 Jan 86 By IV CPC
Original BP Fixed For Maj For Dec 95 Due Initial Fixation By IV CPC
Assumed BP Refixed Vide GOI  Ltr For Maj As On 01 Jan 86
Assumed Revised BP For Dec 95 Due Implementation Of GOI Ltr
Arrears For BP And DA For IV CPC
Intt @ 6% For 7 yrs
If the major in the above example is lucky and/or wishes to be optimistic and assumes upward revision of BP for Dec 95 will result in re-fixation of BP for V CPC, then the following arrears could be “hoped for” as well
Original BP Fixed For Same Maj On 01 Jan 96 By V CPC
Assumed BP Refixed Vide GOI  Ltr As On 01 Jan 96
Assumed BP Revised As On DOR Due Implementation Of GOI Ltr
(without any stagnation increment at end of scale)
V CPC Arrears For BP And DA As On DOR
97926.00 54000/-
Intt @ 6% For 7 yrs
41128.92 22680/-
{Edit: Arrears for V CPC have been amended as the original figures of  97296/- &
  41128.92/- represent the total arrears and intt. for both IV and V CPCs}
One does come across opinions that tend to dwell on the means that might be deployed to "short-change" the affected parties. In that line of reasoning, there may well be an attempt to restrict the enhanced revised BP of IV CPC to a level below the starting stage of the next rank in the IV CPC scale. An example could be that at, or after, the initial refixation on 01 Jan 86, the BP of a Maj would ultimately stagnate at 3800/- till the date he was promoted to Lt Col. In other words, in the example in the table above, the refixed BP of the Major would start at 3800/- and not Rs.4050/- even if the revised calculation yielded the latter figure. The BP would become 3900/- only on the date of promotion to Lt Col. This is a fairly dark and pessimistic view but it does bring us back to those increments vs scale-revision considerations of the past.