Dissecting The V CPC Pay Fixation Formula

{Edit: 16Apr2017: It is gratifying to know this blog-post continues to draw views and interest almost five years after it was published. There may well be as yet unresolved issues regarding the Rank Pay matter. However for the Officer cadre, as well as veteran Officers, there is that other totally unresolved issue of the selection of date of implementation of phase-I recommendations of AV Singh Committee. Just like the rank pay matter, that issue affects all Officers who were serving and also those who had retired by the time the recommendations were implemented. For some time now, I have permanently linked that issue to the right of the blog page as a "Featured Post". All pre 2004 commissioned Officers still in service and veterans could consider going through the matter that affects them all. Here is another link that can be clicked on to view all connected posts}

With the recent distraction caused by news on the COS Report regarding pension anomalies, the spotlight has shifted somewhat from the crunch issue of arriving at a reasonable understanding of implications of the "Rank Pay" case judgement.

It's heartening to note that even the agencies responsible for implementing the judgement have begun to issue some notices on the matter on their web-sites. Some of the lingering doubts regarding the applicability of the judgement post V and VI CPCs are being gradually dispelled as the afore-mentioned notices mention calculations post V and VI CPCs.

Making a reasonable assumption on the manner of the initial fixation of basic at IV CPC, it should be possible to arrive at a, again, reasonable estimate of what the basic pension pay would have been as on 31 Dec 95. Here the result of the efforts of the countless spread-sheet warriors, who had descended on the scene, could prove useful.

The real issues here too would be:

*The viability of the formula used by V CPC for working out the emoluments.

*The manner of addition of Rank Pay to the emoluments.

*The fixation of the worked out revised basic in the appropriate pay-scale corresponding to each rank.
To recall, V CPC had used the following formula for adding up the unrevised emoluments relating to Jan 96: 

1.4[{Un-Revised Basic+Stagnation Pay}+Un_Revised Rank Pay]+DA+IR-New Rank Pay 

The following points cloud the issue somewhat:

*It's not clear why the IV CPC Rank Pay was added to the sum and not the revised, and higher V CPC Rank Pay.

*Why, after adding the lower amount of the unrevised rank pay, the higher amount of the revised rank pay was subtracted from the aforementioned calculated amount for fixing the new revised basic in the appropriate pay-scale.

If the logic of adding rank pay for calculating to the emoluments, as understood from the judgement, is to be followed, the formula ought to have been as follows:



1.4[{Un_Revised Basic+Stagnation Pay}+Revised Rank Pay]+DA+IR

A third alternative could have been to add the unrevised rank pay but not subtract the new revised rank pay, as follows:

     1.4[{Un_Revised Basic+Stagnation Pay}+Un_Revised Rank Pay]+DA+IR 

{Edit}: A fourth alternative would be to retain the old rank-pay in the 40% component but to add the new rank pay for fixation. Let's not forget, at IV CPC the rank-pay which was then "new" was to be added (but wasn't) to the emoluments. At that time the "old" rank-pay was nil and did not figure in the calculation in the 20% component of the IV CPC formula. So we get the fourth alternative as follows:

1.4{Un_Revised Basic+Stagnation Pay}+0.4{Un_Revised Rank Pay}+DA+IR+Revised Rank Pay

Now giving specific examples, or making actual calculations, would be foolhardy in the extreme. We need to get some sort of an indication which one of these alternatives would be most rational in light of the actual arguments that took place during the litigation.

Only through a process of exchange of views and ideas can one hope to arrive at a rational solution to the V CPC stage of the puzzle.

A trial calculation yields the following alternatives for the minimum basic pay of each rank:



Rank	Unrevised  Starting Basic Pay For Rank In IV CPC  Scale	IV CPC Rank Pay	DA	IR I	IR II	V CPC Rank Pay	V CPC Formula Alt 1	Alt Formula 2	Alt Formula 3	Alt Formula 4	Starting Pay In Rev Pay Scale	Next Applicable Increment
I	II	III	IV	V	VI	VII	VIII	IX	X	XI	XII	XIII
							1.4(II+ III) + IV+ V+ VI-VII	1.4(II+ VII) + IV+ V+VI	1.4(II+ III) + IV+V+ VI	1.4(II)+ 0.4( III) + IV+V+ VI +VII
Capt	2900	200	4588	100	310	400	8938	9618	9338	9538	9600	300
Maj	3400	600	5180	100	400	1200	10080	12120	11280	11880	11600	325
Lt Col	3900	800	5217	100	470	1600	10767	13487	12367	13167	13500	400
Col	4500	1000	6105	100	550	2000	12455	15855	14455	15455	15100	450
Brig	4950	1200	6660	100	615	2400	13585	17665	15985	17185	16700	450

IV CPC Pay Fixation: The "Additional-Increments Vs Scale-Change" Debate

In the absence of any direct guidelines, hints from the direct litigants or a communication from the MOD, going through the process of guesswork attached to the implementation of the "Rank Pay" judgement is a bit like gingerly navigating through a pitch dark room with the knowledge of the ever-present risk of bumping into an article of furniture.

 

Some of the inputs on the subject do serve to mislead. Let's take the "Naval Brief" for instance. What practical purpose would be served by adding the rank pay to the sum of Un-revised Basic Pay, DA, IR and 20% of Basic Pay if one is to subsequently subtract the same rank pay from the sum? One might as well not bother about rank pay in that case and settle for the fixation that was done on the sum of 1.2(Basic_Pay), DA and IR and, once again, the fixation would still be as per the years of service and it'd be governed by the Basic Pay defined for each stage in the IV CPC running pay-scale. In effect, arrears would amount to a big fat zero. I don't think that's what the decades long litigation was about.

 

The most important insight that was offered in the matter has been commented upon here. The most useful views that have been received on the subject are of a subtle variety. One has to piece together some concept of what the real situation is from one's inferences.

 

I had attempted to highlight what the running pay-scale would look like if each rank stage was fixed with the sum of rank pay and the emoluments calculated by adding 20% of unrevised BP to DA, IR and unrevised BP. The increments would have to change and the increments would not be logical, as was keenly spotted here. We cannot change the number of stages in between ranks and the revised basic after adding rank pay is fixed for the starting rank of each rank. The net result is a sort of distorted running pay-scale with increments that go up and down without any logic other than of needing to fit in with the other constraints the assumptions place on the manner of fixation.

 

Therefore, we come to the other alternative for fixation, frequently mentioned in forums and blogs, of granting extra increments to each Officer while using the same old running pay-scale.  But it is to be remembered the rank-stages do not change in the running pay-scale. If they did we'd again be presented with the distortions in increments. The increments here are only for fixing the pay of Officers by taking the rank-pay into account.

 

But, in this "model" of fixation an Officer promoted subsequently to the rank of Capt would still get Rs. 2900/- as basic on completing 6 yrs, a Major Rs.3400/- on completing 12 years, and so on. As the pay-scale ends at Rs. 5100/-, this model permits only one increment in the rank of Brig.

 

This kind of pay fixation was covered in a previous blogpost. But to view it in isolation, for the sake of clarity and an emphasis on pay fixation with increments, here is another version.

 

Rank Stage Fixed By IV CPC Running Pay Scale	Basic Pay as Defined In Pay Scale	A Model For Fixation Of Pay Arrived At By Adding Rank Pay To Basic Pay Of Pay Scale {For An Officer With The Min Service For Each Rank Stage As On Date Of Fixation}
2nd Lt	2300	2nd Lt
	2400
Lt	2500	Lt
	2600
	2700
	2800
Capt	2900
	3000
	3100	Capt with 2 increments
	3200
	3300
Maj	3400
	3500
	3600
	3700
	3800
Lt Col	3900
	4050	Maj with  6 increments
	4200
	4350
Col	4500
	4650
	4800	Lt Col with 6 increments
Brig	4950
	5100	Brig with 1 increment & Col with 4 increments

 

 

 





 

 

The Effect Of Rank Pay On Rank Stages And Increments : IV CPC

It needs to be repeatedly stated that the how, when, and even if, involved in the implementation by MOD of the Judgement on what we call the "Rank Pay Case" remain real constraints in getting a true picture of what will finally emerge regarding the issue.

But more and more, the inputs and hints one receives on the net indicate that the focus needs to be on the way the running pay scale was defined in addition to how one's emoluments were calculated for revising the pay wef 01 Jan 86. In the previous blog-post, understandably, there have been some queries on how the career profiles at the time would have fitted in with the guesstimates of what the starting pay at each rank-stage should have been.

Defining three basic assumptions needs to be taken care of in this regard:

1.The starting point of the running payscale, and the portion till the rank-pay starts, remain unchanged.

2.The starting pay of Captain is fixed in relation to the nearest equivalent civilian post.

3.The fixation of starting stages for subsequent ranks would be at the next higher stage as per the earlier fixation with the rank pay added.

Now with this, the increments and pay-stages defined in the IV CPC running pay scale do not hold. This leads to my repeatedly stated doubt whether the judgement of the Hon'ble Supreme Court can be implemented only by re-defining the running pay-scale of IV CPC.

In the case of Maj AK Dhanapalan, since there was just one individual set of accounts that was required to be considered, perhaps it was not necessary to see how the rest of the pay-scale got affected. Now, the situation is different.

With the afore-mentioned assumptions, here is one of the ways the IV CPC running pay-scale could be looked at if one chooses to include rank pay along with the previously defined basic-pay stages: 2300-100-2500-150-3100-190-4050-150-4800-187.50-5550-200-6350.

One would like to stress, once again, this is merely hypothetical and could be diametrically opposed to the correct or official interpretation. Nevertheless, it's a point of view and the real solution could be a slight or large variation on this theme. With the above pay-scale, the rank stages could have looked something like this (please click on the table for a clearer view):

The IV CPC Running Scale Conundrum

At the very outset, there appears to be something the matter with the running pay-scale (shown shaded in yellow in the 2nd table, at the bottom of this blog post) that was defined for armed forces Officers by IV CPC.

The emoluments, as on January 1986, in respect of unrevised basic, dearness allowance, interim relief and 20% of unrevised basic pay were added and the sum obtained was fixed in the new running pay scale introduced at the time. The newly fixed basic was, in most of the cases, less than the next “higher stage” on the running pay-scale. It is surmised, the revised basic was fixed keeping in view the minimum pay defined for each rank fixed in the running pay-scale and the number of years of service in that rank for every individual Officer.

Firstly, the new basic pension pay should never have been fixed lower than the sum arrived at by adding the emoluments.

Secondly, the stage for each rank as defined in the new running scale should have been fitted at the next higher pay in the running scale after calculating the sum in the afore-mentioned manner for each rank then drawing a fixed basic pay, DA, IR.

If a Major, just promoted, had the unrevised basic of 1550/-, DA 1470/-, IR 225/- and 20% unrevised basic 310/- i.e. a sum of 3555/-, his stage in the running pay scale should have been Rs. 3600/-. But it was fixed at Rs. 3400/-. This seems strange because if IV CPC defined the new basic pay-scale, each rank-stage in that basic payscale should have minimally conformed to the CPC’s own method of calculating the new basic pay with the IV CPC’s own afore-mentioned formula.

But as it turned out, the new running pay scale introduced by IV CPC did not account for rank pay being part of the basic pay. This has now been found to be incorrect following the 04 Sep 2012 judgement of the Hon’ble Supreme Court. If rank pay is added to the basic, the new fixation of the rank-stages in the running pay scale gets shifted to the right against the running pay-scale for all ranks affected by rank pay.

Taking the example of the starting pay of a Major in the running scale, a graphical representation makes it clear there are issues regarding the fixation. The following screenshot displays the aspect

If one could get access to the pay-scales of III CPC, a row could also be made to establish the rank-stage on the revised running pay-scale for each rank prior to the pay fixation as was done for the example of the rank of Major. It would be found that even without adding the rank pay, the minimum pay for each rank would be higher than the one fixed at the time of IV CPC in the pay-scale.

So the following questions arise for the not so well informed, like myself, amongst the affected parties:

• Does the judgement essentially require the revision of the running pay-scale itself?

• Would the revision of the running pay scale as well as revision of the formula for adding up the unrevised emoluments be required to implement the judgement?

• Which of the alternatives for calculating arrears that seem obvious would best fit in with the judgement? {The pay stages shown in italics and shaded blue are by logical extension of the actual pay-scale on account of the displacement of rank stages due to addition of rank pay}

EFFECT OF ADDING RANK PAY TO BASIC PAY ON RANK-STAGES IN THE IV CPC RUNNING PAY-SCALE



From Rank Stages IV CPC



The Fog Begins To Lift : IV CPC Rank Pay Arrears

It will be some time before all the affected Officers of the Indian Armed Forces, serving and retired, are presented with the exact norms of calculating their arrears of pay and pension, following the recent judgement of the Hon'ble Supreme Court. How the administrative machinery chooses to interpret the judgement would be revealed only when the Government issues formal orders to the disbursing agencies on the manner of calculating of arrears and effecting of payment.

 

The judgement generated megatons of enthusiasm and a virtual explosion of opinions and theories, not all based on hard facts or the soundest of reasoning. But, these did have one positive effect viz., of prompting many to think of what actually transpired at the time of fixation of pay based on recommendations of IV CPC. Now opinions are being heard or read round the clock that similar, or worse, anomalies arose due to implementation of V and VI CPCs.

 

It begins to appear now that the issue was not merely of adding or subtracting the rank pay to the new running scale introduced at the time of IV CPC. Certainly, the incorrect subtraction of rank pay from emoluments used for fixing the revised pay was central to the litigation. But, a reference to the old pay-fixation statement of IV CPC reveals how, even without getting into the issue of rank pay, the re-fixed pay, in many cases, was lower than the formula of [Basic_Pay+DA+IR+20%Basic_Pay] used. An example was cited online as to how the sum of Rs.3555/- arrived at in the case of one Major, was rounded off to Rs. 3400/- and NOT to the next higher stage of 3600/-, or even the one lower stage of Rs. 3500/-, in the pay-scale of Rs 2300-100-3900-150-4200-EB-150-5100 introduced at that time.

 

It would appear the basis of such fixations was the running payscale, which itself was defined without taking the rank-pay into account. The minimum, starting pay for each rank was thus fixed in this running payscale without taking into account the rank pay, which the judgement has now clearly established as being part of basic pay.

 

Now, of course, the formula for calculating emoluments itself needs to be revised in line with the judgement as pointed out in the previous blog post. As to how fixations need to be effected keeping the payscale and minimum-pay issues in view is still not clear. How wide the ramifications could be can be gleaned from the screenshot of a short conversation on a chatroll.

 

 



The Arrears Calculation Frenzy

Following posts on some blogs and media web-sites about the judgement on the Armed Forces Officers' "Rank Pay" case, enthusiasts and optimists chose to flood the web with estimates, queries, opinions and views on what the arrears would be. There have been numerous chats and discussions on the manner of calculation of arrears and the likelihood of further action on obtaining an enhancement of the interest-component ordered by the Hon'ble Supreme Court.

It has to be said, the matter has generated so much of interest and attention amongst the armed forces officers, serving and retired, that it's difficult to think of another instance in living memory of such a sense of collective involvement. After-all, matters such as OROP or NFFU are still in the "Pie In The Sky" class. One may see these hopes and aspirations being realized, or one may not. But the IV CPC rank pay issue strikes a slightly different emotional chord. It represents, directly, a sense of having been wronged, of a fair entitlement having been denied. Matters were not  helped by the not exactly benign and friendly stance represented in the legal contest mounted against the delivery of this entitlement.

Now, at the time of this blog post, it's not known what the judgement exactly says. It's also not known what the response will be from the administrative machinery engaged with the matter. From the gist of the matter, as brought out in the media and on blog posts, it would appear the judgement requires that the pay of all affected officers be refixed wef 01 Jan 86 and the arrears paid, with interest at 6% accruing from 01 Jan 2006.

Understandably, as long as the matter was sub-judice, the individuals and associations would have been reticent in respect of the intricacies of representations made during the litigation process. The net result is it is anybody's guess as to by how much were officers denied their dues through the 'incorrect' deduction of rank pay at the time of pay fixation post implementation of IV CPC. One excel spreadsheet in circulation, representing a train of extremely 'positive thinking', uses the amount of the entire rank pay of the time as arrears, with the resulting sum sufficient to upgrade one's car with ease. Another "brief", purportedly issued by one of the services headquarters, cites examples of the calculations involved and appears to offer, at first glance, a more realistic appraisal of the matter.

Summarising a few basics may not exactly be a bad idea before succumbing to the spreadsheet urge. Basically, the issue requires clarity in respect of the following: 

• It was not the 'Rank Pay' that was denied wef 01 Jan 86, but an amount equal to the rank pay was deducted from the calculation for arriving at the 'refixed' pay wef 01 Jan 86. That does not mean the arrears for the month of January 1986, resulting from the incorrect calculation were equal to the rank pay. 
• Essentially, the issue is how the total unrevised emoluments were calculated for January 1986 and how the revised emoluments were then used to "fix" the basic in the revised pay scale. Because of the rounding off involved, the difference between the revised basic pay as fixed and the revised basic pay as it should have been calculated, was considerably less, in most cases, than the rank pay amount itself. So, calculating arrears based on the rank pay amount may not exactly be the most rational solution. The new SUV may have to wait awhile.
•  IV CPC : The following formula was used for calculating the basis for refixing the pay: 

• Unrevised Basic Pay for January 1986+DA+Interim Relief+20% of Unrevised Basic Pay for January 1986. Though the Rank Pay granted wef January 1986 was to be added to this, it wasn't and hence the litigation.
•  The amount obtained, without including the rank pay, was used to refix the revised basic by rounding off to the nearest figure for the rank in the new payscale of  Rs 2300-100-3900-150-4200-EB-150-5100. This refixed pay was less than what it should have been if Rank Pay had been included in the calculation, but not by an amount equal to the rank pay.
• It is only a guestimate, and ought to be treated as such, but that afore-mentioned "brief", purportedly from one of the services HQs, does offer an insight into how the calculation ought to have taken place. The "brief" says the calculation should have been Unrevised Basic Pay for January 1986+DA+Interim Relief+20% of Unrevised Basic Pay for January 1986+Rank Pay For January 1986.
• There has been a hum, and the jury is still out on that one, as to why the calculation should not have been  Unrevised Basic Pay for January 1986+DA+Interim Relief+20% of the sum of Unrevised Basic Pay for January 1986 and Rank Pay For January 1986+Rank Pay For January 1986.

• Now, what the precise submission has been by the litigants and how exactly the Hon'ble Supreme Court has ruled is anybody's guess at the present juncture. But if one of the above-mentioned ways of calculation does fit the bill, then the next question is, does the sum arrived at form the basis for directly fixing the revised pay in the scale by rounding off to the next stage OR does one first subtract the rank pay from the sum and then fix the amount arrived by rounding off as revised pay in the scale. That aforementioned "brief" would appear to suggest the latter course, even though it does not propose inclusion of rank pay along with the basic pay in the 20% part of the equation.

•  So, we are presented with a number of possible solutions right at the stage of IV CPC: Calculation with Rank Pay in 20% portion or without. Fixation with removal of rank pay from sum arrived at or without.  

• V CPC : After we arrive at a solution, we need to deal with the pay fixation for V CPC. Now, in this case the pay fixation was done with this formula Unrevised Basic Pay for January 1996+DA+Interim Relief+40% of Unrevised Basic Pay for January 1996+Unrevised Rank Pay For January 1996. It is quite possible revised rank pay for January 1996 should have been added and NOT the unrevised one. From the sum arrived at, the revised rank pay of January 1996 was subtracted, and the resulting figure was fitted in the appropriate scale by rounding off. This leads to the following alternatives for calculating the revised pay in line with the judgement : 

• Unrevised Basic Pay for January 1996+DA+Interim Relief+40% of sum of Unrevised Basic Pay and Unrevised Rank Pay for January 1996+Unrevised Rank Pay For January 1996. 
• Unrevised Basic Pay for January 1996+DA+Interim Relief+40% of sum of Unrevised Basic Pay and Revised Rank Pay for January 1996+Revised Rank Pay For January 1996.

The foregoing is based on guesswork. Details being known only to the direct litigants, the purpose of this blog post is not to state "what is what" but point to the difficulty of establishing "what is what". It would, therefore, be foolhardy, to hazard a guess as to the likely volume of the anticipated inflow of funds. If not a trickle, it may not be the flood some may be thinking about. It may be best to wait for clarifications from RDOA and for the issue of formal orders by the adminstrative machinery.

The essence of the matter is that fairness has prevailed, the diligence of the litigants has borne fruit and the collective stand has been vindicated.

RDOA'S GLORIOUS VICTORY

Whenever cynicism, coupled with bitterness and it's cousin, apathy, tend to turn from unwelcome guests into permanent encroachers on the cerebral landscape, there's always some form of salvation in the shape of an individual, or group of individuals who, through sheer will and doggedness, set about redressing wrongs.

RDOA's legal victory, is in effect, just such an example of 'salvation'. The effective manner in which the association steered and co-ordinated the litigation connected with the "Rank Pay Case" related to IV CPC ought to serve as a benchmark for decades to come.

The fact that RDOA pursued the matter, through it's tortuous course, in the collective interest serves to underscore the superlative gallant spirit so easily discernible in this great legal triumph. (link now expired).