30% salary hike through 50% DA Merger - Percentage analysis

Can the govt. servants get 30% Salary hike on account of 50% DA Merger? – An analysis

It is observed that recently Public Medias are interested to publish the news about pay hike of central government employees.

We all know the Federations of Central Government employees have been holding demonstrations and Struggles to invite the attention of govt. to settle their many demands for the past few months. As a result of this Centre has accepted to settle some demands.

One of the main demands laid down before the Central Government by Federations is 50% DA Merger. A Sensational News was spread across the country that a decision on 50% DA merger will be announced in the Cabinet Meeting held last week. But, though there

was no any formal announcement in this regard, the approval of 7th CPC Terms of reference by Government made everyone to think that it will be considered sooner or later.

A Popular English daily published a tabloid news last week, in which The daily claimed that a govt. official informed them ‘the govt. servants will get 30% Pay Hike on account of Merger of 50% dearness Allowance with Basic Pay.’

Is that true? Let us see with an example

For example, let us consider as if a government servant is working in one of the four metropolitan cities and rendered 10 years’ of service.

His Basic Pay is (7600+2400)	10,000
Dearness Allowance 100%	10,000
HRA 30%	3,000
Transport Allowance (1600+1600)	3,200
Total	26,200

Rs.26,200 is the maximum total emoluments of this particular Basic Pay. This will not be exceeded at any cost but there are some reasons to make these total emoluments to be lesser than this.

The salary with same basic pay after DA merger

In case the central government agrees to merge the 50% DA with basic pay, then that govt. servant can expect a considerable pay hike on account of Merger of 50% DA.

After Merger of 50% DA his Pay will be as fallows

Basic Pay (7600+2400)	10,000
Dearness Pay	5,000
Dearness Allowance	7,500
HRA	4,500
Total	29,400
Total Hike in Pay (29400 – 26200)	3,200
% of Hike is	12%

How can one say that he will be getting 30% hike when he is getting only Rs.3200 in addition to his previous salary of Rs.26,200 after 50% DA merger?

Everybody fallowed the particular Daily and started writing that the Government servants will get 30% salary hike after 50% DA is merged with basic Pay. But this example clearly shows that there is no such hike and if the DA is merged with Basic Pay the increase in salary will be only from 8% to 15%

According to their entitlement the percentage of increase will vary, but no one can get 30% pay hike on account of DA merger.

Source:http://7thpaycommissionupdates.blogspot.in/2014/03/can-govt-servants-get-30-salary-hike-on.html

Confederation sought merger of 100 percent DA with effect from Jan 2014

Confederation sought merger of 100 percent DA with effect from Jan 2014

A workshop organised by the Confederation of Central Government Gazetted Officers’ Organisations, Tamil Nadu region, has finalised the common minimum demands to be placed before the 7 Central Pay Commission, including a just and equitable pay at the entry level of Group ‘B’ officers.

GET READY FOR STRIKE IF GOVERNMENT REJECTS DA MERGER, GDS INCLUSION & INTERIM RELIEF

   Eventhough Government has announced constitution of 7th Central Pay Commission, the appointment is yet to take place. In the meanwhile one round of discussion was held with Secretary, DOP&T on terms of reference. Subsequently, the staff side, JCM National Council has submitted a unanimous proposal on the items to be included in the terms of reference of the 7th CPC, which includes (i) date of effect as 01.01.2014 (2) merger of DA with pay (3) grant of interim relief (4) inclusion of GDS under the ambit of 7th CPC (5) statutory pension for those entered into service on or after 01.01.2004 (6) settlement of anomalies of 6th CPC (7) cashless/hassle-free medicare facilities etc.

   Government while announcing the 7th CPC has made it clear that the date of effect will be 01.01.2016. Further nothing has been mentioned about DA merger and interim relief. Regarding GDS the declared stand of the Government is that GDS are not civil servants and in the past also every time when CPC is appointed, the Government refused to include them in the Pay commission. Last time also inspite of the strong protest and agitational programmes conducted by NFPE and Postal JCA, the Government has appointed a bureaucratic committee. Regarding statutory pension to those who entered into service on or after 01.01.2004, the Government’s stand is well known and it may refuse to include this item also in the terms of reference.

Govt. workers want DA to be merged with salary.

   Government employees have asked the Centre to consider merging dearness allowance with their pay, arguing that the Sixth Pay Commission -- quite like the Centre -- could not have anticipated the high inflation that has eroded real wages over the last decade.

   Since 2006 – when the recommendations of the last pay commission came into force – the dearness allowance has increased to 90%, a reflection of the high inflation environment that employees have to cope up with.

   The demand was made at a preliminary meeting held between the department of personnel and the employee representatives to discuss the proposed Seventh Pay Commission announced by Prime Minister Manmohan Singh in September.

Merger of Dearness Allowance with the Pay of the Central Government Employees – reg.

Prime Minister’s Office
New Delhi – 110101

Sub: LETTER OF Sh. M RAGHAVAIAH
NFIR, 3, CHELMSFORD ROAD, NEW DELHI-55

   A letter dated 27-09-2013 received in this office from Sh. M RAGHAVAIAH is forwarded herewith for action as appropriate.

[RITU SHARMA]
SECTION OFFICER

NFIR
National Federation of Indian Railwaymen
3, CHELMSFORD ROAD, NEW DELHI- 110055
Affiliated to:
Indian National Trade Union Congress (INTUC)
International Transport Workers’ Federation (ITF)

No. 1/5 (A)

Dated: 27.09.2013

Hon’ble Prime Minister of India,
Raisina Hill,
South Block,
New Delhi.

Respected Sir,

Sub:- Merger of Dearness Allowance with the Pay of the Central Government Employees – reg.

   While thanking you for the decision for appointment of 7th Central Pay Commission, we request you to kindly appreciate that the Dearness Allowance paid to the Central Government employees had crossed 50% of pay as on 01.01.2011. This portion of the Dearness Allowance needs to be merged with the Pay for all purposes as was done in the year 2004.

Shortly DA would cross 100 percent. Once again, all allowances would enhance by 25%.

   As per the information received, unlike previous time, decision on DA would be taken by Cabinet Committee Meeting without delay. Subsequent to release of AICPIN for the month of June by Labor Bureau, Finance Ministry would send for the approval of the Cabinet for final decision on DA. After obtaining the approval, Finance Ministry would release the specific orders procedurally for disbursement of money.

   Additional DA will be paid along with the salary of this month

   The arrears for the month of July and August would also be paid. With the increase of DA by 10%, the total amount of DA would enhance and stay at 90%.

   By next year, it would cross 100%. During that period, as pointed out in the 6th Central Pay Commission, certain allowances would enhance by 25%. But, that is not the expectations of the Central Government Employees. Their requirements are merger of DA with Basic Pay.

Merger Of 50% DA With Pay : Resolution adopted in INTUC Conference.

Merger Of 50% DA With Pay

   The 30th Plenary Session of Indian National Trade Union Congress INTUC  is being held in Raipur from 6-9-2013 to 9-9-2013 is concluded today. There are 4 Resolutions which are considered to be very important are adopted in this Conference.One of the four main resolution is Merger of 50% DA with Pay for central government employees. So the INTUC urges the central government to consider the demand  and accord sanction for merging 50% DA with pay. The Resolution On Merger Of 50% DA With Pay which has been adopted in 30th Plenary Session of  INTUC held in Raipur from 6-9-2013 to 9-9-2013 is given below

Resolution On Merger Of 50% DA With Pay

   The Wage structure revision for Central Government employees had been enquired into by the successive pay Commission appointed by the Government of India during the past decades and gave their reports. The Government had considered the reports and decided for implementation with certain changes and improvements.

Expected Dearness allowance from July 2013.

   It is now confirmed that the rate of Dearness Allowance from July 2013 will be increased by 10% according to the AICPIN average for the past twelve months starting from July 2012 to June 2013.The Consumer Price Index Number for the month of June 2013 is released on 31st July 2013 by Labour Bureau, Ministry of Labour and Employment  in its Official site.

   All the central government employees will not be interested to know about the CPI numbers if it has no role in the calculation to obtain the rate of dearness allowance paid to central government employees. Since the dearness allowance is paid to central government employees to compensate the price rise, the AICPI numbers is the only factor to measure the increase in the prices of essential commodities. So the AICPIN for Industrial Workers is obviously inevitable part of the formula prescribed for calculating the rate of dearness allowance to be paid to central government employees.

   It is not only for central government employees, but all the state government employees have also been paid the same rate of dearness allowance. Once it is declared by the central government, all the state governments have no other go than to fallow it. That is why the AICPIN for Industrial workers has been watched keenly by all the central Government Employees and state government employees every month.

Important factors to set up 7th CPC and DA merger.

   The General Secretary of Confederation of Central Government Employees and Workers of Karnataka State published a valuable post regarding 7th CPC. It is reproduced the same for your reference.

7th CPC Demand
Comrades,

   Confederation of Central Government Employees and Workers have been demanding constitution of the 7th CPC, DA merger , and other 15 charter of common demands of the Central Government Employees apart from 48 common demands of the CG Employees which has been accepted by the Kolkatta conference.

   The Common questions & answers which the Government of India has been  answering is that as follows.

   1) The 6th CPC has not recommended the DA merger has recommended 25% increase in certain allowances.

   2) The 6th CPC has not recommended the constitution of the 7th CPC and is silent on this issue.

   3) Normally it takes 10 years to set up another Central Pay Commission.

   4) The DA as recommended as per the Consumer price index is released which works out to 80% as on 1/1/2013. So when ever the prices have gone up DA is provided to compensate the rising of prices.

   5) If another Central Pay Commission is set up there will be huge burden on common man, at this stage the Government of India cannot afford to set up 7th CPC.

   6) The anomalies  are being taken up the National anomalies committee.

Now comrades the above reply are standard in nature, all the above questions are answered in the following text.

   If we really look at the DA and the Cost of living we can  find that the actual cost of prices have gone up over 200% and the actual DA we are getting is only 80%. Hence there is a big gap between the actual price rise and the real DA we get there are many factors behind it, hence 7th CPC and DA merger are too vital things to bridge the Gap between the actual spending and the actual salary. For example in case of an MTS / LDC / Postmen his salary will be around Rs 15,000/-  The actual spending is Rs 25,000/  which includes house rent of Rs 8,000/- (against Rs 3000/- as HRA)  light bill, water bill telephone bill, petrol bill, local travelling  etc itself will account for Rs 5000/-  apart from purchase of provisions and vegetables which accounts for Rs 12,000/ for a family of 4 persons.  Apart from above there will be many unforeseen expense such as attending marriages, medical, Children education expenses, which may work out more than Rs 30,000/-  today the salary given to the CG Employees by the Central Government  are insufficient. The minimum wages should be Rs 25,000/- the actual salary should be doubled.

   Today the Government has itself admitted that the inflation is around 11% and the Consumer Price Index  has crossed more than 110 points from 116 as on 1/12006 to 226 points as on April 2013. In that case the actual DA should have been 110 % not just 87% as on April 2013.

   Once the price rise is more than 100% ,we are entitled for an Central Pay Commission and DA merger.  Comparing price rise in last 30 yrs are so we can observe in last six years the price rise graph has risen dramatically, ie the prices have increased to a maximum beyond common mans reach,  the rupee value has gone down drastically , internationally the dollar rate is higher, GDP is very low just around 6%.  The purchasing power has gone down. The value of our salary six years back and now if we make a simple compare, our salary is nothing compared to private market.  Now we observe that the Banks, LIC & PSU wages are revised every 5 years. As far as CG Employees it is more than 10 yrs. The DA has crossed more than 50% as on 1/1/2011. We should demand 7th CPC effective day from that day ie 1/1/2011.

   The DA merger was accepted principal of many CPC and 5th CPC had recommended it there by if DA merger is implemented our salary will increase by 20 to 25 %. and we should get arrears from 1/1/2011.  This will also affect other allowances such as HRA, Tour TA/DA etc.  The present DA as on April 2013 is 87%. and in a span of one year it will cross 100%. there by dual benefit we should get.

   The Railways have got the benefit in revision of many allowances let it be OTA, NDA, Compassionate appointment etc. Where as for other CG Employees many of the allowances are not revised from past 15 years or so

   Even the 5th &  6th CPC Pay Anomalies are not rectified even after many years. there is discontent amongst the employees.

   The actual wage bill is just 8.5 % of the revenue collection. The Government being model employer should pay its employees the real wages.

   Our joint struggles have yielded results in the past we have to once again wage a long battle before the Government, the above statements by the Government  will also undergo a change if we are serious about the issue.

   If we look at the actual prices recommended by 6th CPC  wide para number 2,21  and the current prices we can notice that

6th CPC rates and present rates
common items used on daily basis

Comparative Chart:

Sl no	Item	Per	6th CPC rates	Rates	Rates as	% change
			in Rs as in	as per CPI	per Market	compare
			table 2.21	in Rs	in Rs	to 6th CPC
			as on 1.1.2006	as on 1.1.13	as on 1.1.13	prices
1	Rice	Kg	18	26	55	266
2	Dal (Toor/ urd)	Kg	40	59	85	145
3	Raw Veg	Kg	10	15	50	500
4	Greenleaf Veg	Kg	10	14	25	250
5	Other Veg	Kg	10	17	40	400
6	Fruits	Kg	30	25	80	266
7	Milk	lt	24	26	34	125
8	Sugar and jaggery	Kg	24	34	40	166
9	Edible Oil	Kg	50	96	100	200
10	Fish	Kg	120	157	320	266
11	Meat	Kg	120	257	320	266
12	Egg each	each	2	4	5	250
13	Detergents etc	Kg	200	240	350	175
14	Clothing	Mt	80	61	150	187
15	Cokked meals			32	70	187

CPI: Consumer Price Index published by Government of India

   Market Rates as per local market  rates in Bangalore

   There are nearly 252 items in the consumer basket for  determination of consumer price index, in real terms the essential items for determination of CPI should have been only 52 items as per need based wages, by keeping a vast items in the basket the actual price rise is not reflected.
 
   The actual DA for central government employees  should have been 200 %  not just 80% as on 1/1/2013. The Consumer Price Index of 2001 which was at 115 points as on 1/1/2006 should have been more than  300 points rather than at 219 points as on 1/1/2013. The Miscellaneous articles weight age accounts for 25%. the food articles accounts for 58% weight age . Even if the  rise in food articles is there, the cost of TV Computer, Mobile etc where there is reduction is taking place , thus depriving of the actual increase in CPI. Overall the Consumer Price Index for the CG Employees is not satisfactory, this has deprived us of the actual DA & wages.  

Current DA formula

   Dearness Allowance = (Avg of AICPI for the past 12 months - 115.76)*100/115.76
   by which is  the DA for entire year of 2006 was only 2% due to faulty formula.

   The Average of the past 12 months should be removed and the division factor of 115.76 is also not correct. The weighted of three months average should have been taken in account rather than 12 months average, by this today DA would be 108% rather than 87%. when we are getting DA in six months, why should  we go for 12 months average.
 
   The actual cost of the goods at villages and the cities are differently different The cost of one kg of tomato will cost around Rs 15 in a village after it brought to a retails shop in a city it is sold at Rs 40/- per kg. The weight age of just 20% is not correct it should be 40% .

   The whole system of the  All India Consumer Price Index Number for Industrial Workers (CPI-IW) on base 2001=100   & DA formula for the Government employees is wrong and needs a relook.

   Now the question of government paying capacity we can observe that actual spending on wage bill is on 8.5% of the revenue collection compared to 30% earlier days. 

   The background of the demand for setting up the 7th CPC raised by the Central Government employees on the ground that the wage revision was due in January, 2011,it would be pertinent to examine the wages as a ratio to the revenue resources and revenue expenditure of the GOI in the crucial years 1960-61`,1975-=76, 1986-087, 1997-98 and 2006-07 the relevant years in which the 2nd, 3rd,4th 5th and 6th CPC recommendations were given effect to. It is not difficult to discern the declining trend over the years , which is suggestive of the erosion in the real wages of the Public servants in India.

Year	Revenue Budget		Wage Bill	Wage Bill as % of
	Total Revenue receipts	Total Revenue Expenditure.		Revenue Receipts	Revenue expenditure.
1960-61	1,297	1,246	417	31.3	33.5
1975-76	8,075	7,189	1,887	22.0	22.8
1986-87	33,083	40,860	6,100	18.4	14.9
1997-98	1,33,901	1,80,350	27,430	20.5	15.2
2006-07(BudgetEstimate)	4,03,465	4,88,192	41,770	10.4	08.5

   We could see the emerging picture of a declining trend in the ratio of wages and salaries both with reference to revenue receipts and revenue expenditure.

Years	Total Rev. Receipts	Total Rev. Expenditure	Wages & Salary Bill Amount Value	Wage Bill as % of Revenue Receipt	Wage Bill as % of Revenue Expenditure
1991-92	66,047	82,308	10,744	16.3	13.1
1992-93	74,128	92,702	13,397	18.1	14.5
1993-94	75,453	108169	14585	19.3	13.5
1994-95	91,083	122112	15721	17.3	12.9
1995-96	110130	139860	18023	16.4	12.9
1996-97	126279	158988	20396	15.6	12.8
1997-98	133901	180350	27430	20.5	15.2
1998-99	149510	217419	31560	21.1	14.5
1999-00	181513	249109	33978	18.7	13.6
2000-01	192624	277858	33986	17.6	12.2
2001-02	201449	301611	31407	15.6	10.4
2002-03	231748	339627	33317	14.4	9.8
2003-04	263878	362140	34554	13.1	9.5
2004-05	306013	384351	38653	12.6	10.1
2005-06RE	348474	440295	40047	11.5	9.1
2006-07RE	403465	488192	41774	10.4	8.5

Source: http://karnatakacoc.blogspot.in/2013/06/7th-cpc-demand.html