INDIA BUSINESS WORLD - JANUARY 16^th - JANUARY 31^st - 2008

GOVERNMENT PERMITS MERGER OF 50% DA WITH BASIC PAY FOR CPSE EMPLOYEES

Consequent to the recommendations of the 2nd Pay Revision Committee headed by Justice M. Jagannadha Rao for executives of Central Public Sector Enterprises (CPSEs), the Government has permitted merger of 50% of Dearness Allowance with Basic Pay to the employees of CPSEs following 1997 IDA pattern of scales of pay. The Board of Directors of respective CPSEs can decide on the merger of DA with the approval of their Administrative Ministry. The merger of 50% DA will be subject to the following conditions:

(i) Portion of IDA equal to 50% of the existing basic pay in respect of employees in CPSEs following IDA pattern of pay scales at 1997 levels for employees of CPSEs may be merged w.e.f. 1.1.2007 with the basic pay of the employees and shown distinctly as Dearness Pay (DP), which would be counted for purposes like payment of allowances, transfer grant, retirement benefits, contribution to Contributory Provident Fund, Licence Fee, various advances etc.

(ii) The merger of IDA equal to 50% of the existing basic pay may be allowed to employees of CPSEs following IDA pattern of pay scales at 1997 level that are not loss making and are in a position to absorb the additional expenditure on account of merger of 50% of IDA with basic pay from their own resources without any budgetary support from the Government. The budgetary support would not be available for this purpose.

(iii) Similar benefits of merger of IDA equal to 50% of the existing basic pay as at sub-para (i) above may also be extended to the employees in the IDA pattern pay scales in the Food Corporation of India.

(iv) The entitlements for LTC, TA/DA while on tour and transfer would, however, continue to be governed on the basic pay alone without taking Dearness Pay into account.

(v) Portion of Dearness Allowance converted into Dearness Pay would be deducted from the existing rate of Dearness Allowance while computing quantum of Dearness Allowance.

(vi) The Board of Directors of each CPSE would consider the proposal for 50% merger of DA with Basic Pay for executives and workmen keeping in mind the capacity of the company to pay and submit a proposal to the Administrative Ministry which will approve the proposal with the concurrence of its Financial Advisor.

There are 247 CPSEs in the country as on 31st March, 2007. In total, there are about 16.3 lakh employees in 247 CPSEs as on 31.3.2007. Approximately, 96.4% of the said workforce belongs to IDA pattern scales of pay. This decision will benefit most of these employees who are on 1997 IDA scales of pay. With this, one of the major demands of employees of CPSEs has been met by the Government.