Thursday, December 22, 2011

Thursday, November 10, 2011

Sixth Pay Commission to apply on pre-2006 retirees also: CAT

In a relief to senior citizens, who retired from government service before 2006, the Central Administrative Tribunal (CAT) has directed the Centre to re-fix their pension on the basis of recommendations of the Sixth Central Pay Commission (VI CPC).

The order will provide relief to thousands of such retired government servants whose pension would increase substantially. A three-judge bench of CAT headed by its Chairman Justice V K Bali quashed the August 29, 2008 government resolution which amended the recomendations of the sixth pay commission due to which the pre-2006 retirees were getting lower pension than the post 2006 retirees. The bench passed the orders on a bunch of petitions filed by individuals, their association -- Central Govt. Pensioners Association -- claiming pension at par with post-2006 retirees on the recommendations of the VI CPC, which took effect from January 1, 2006.
Source : PTI

Sunday, October 30, 2011

Better protection of veterans' rights

BEIJING- Chinese Premier Wen Jiabao and Chairman of the Central Military Commission Hu Jintao Saturday issued an order to publicize the Regulations on Resettlement of Ex-Servicemen, which will take effect from November 1.
Formulated with an aim to protect the legitimate rights and interests of ex-servicemen, the 53-article document highlights a series of initiatives designed for the appropriate placement of veterans.
State organs, social groups, enterprises and public institutions should give preferential treatment to ex-servicemen while recruiting staff members or contract workers, according to the regulations.
The regulations provide that demobilized soldiers who register for a civil servant examination or apply for a position in government institutions will be given preference.
Those companies or organizations which recruit retired soldiers will enjoy favorable policies prescribed by current laws and regulations.
 (Source- China daily)

Tuesday, October 11, 2011

Grant of Dearness Relief to Central Government pensioners/family pensioners - Revised rate effective from 1.7.2011


F. No.42/15/2011-P&PW(G)
Government of India
Ministry of PersonneL, Public Grievances & Pensions
Department of Pension & Pensioners’ Welfare
3rd Floor, Lok Nayak Bhavan,
Khan Market, New Delhi - 110003

Date; 5th October, 2011


Subject: Grant of Dearness Relief to Central Government pensioners/family pensioners - Revised rate effective from 1.7.2011.

The undersigned is directed to refer to this Department’s OM No. 42/15/2011-P&PW(G) dated 29th March, 2011 on the subject mentioned above and to state that the President is pleased to decide that the Dearness Relief (DR) payable to Central Government pensioners/family pensioners shall be enhanced from the existing rate of 51% to 58% w.e.f. 1st July, 2011.

2. These orders apply to (i) All Civilian Central Government Pensioners/Family Pensioners (ii) The Armed Forces Pensioners, Civilian Pensioners paid out of the Defence Service Estimates, (iii) All India Service Pensioners (iv) Railway Pensioners and (V) The Burma Civilian pensioners/family pensioners and pensioners/families of displaced Government pensioners from Pakistan, who are Indian Nationals but receiving pension on behalf of Government of Pakistan and are in receipt of ad-hoc ex-gratia allowance of Rs. 3500/- p.m. In terms of this Department’s OM No. 23/1/97-P&PW(B) dated 23.2.1998 read with this Department’s OM No. 23/3/2008-P&PW(B) dated 15.9.2008.

3. Central Government Employees who had drawn lumpsum amount on absorption In a PSU/ Autonomous body and have become eligible to restoration of 1/3 commuted portion of pension as well as revision of the restored amount in terms of this Department’s OM No.4/59/97-P&PW (D) dated 14.07.1998 will also be entitled to the payment of DR @ 58% w.e.f. 1.7.2011 on full pension i.e. the revised pension which the absorbed employee would have received on the date of restoration had he not drawn lumpsum payment on absorption and Dearness Pension subject to fulfillment of the conditions laid down in para 5 of the O.M. dated 14.07.98. in this connection, Instructions contained in this Department’s OM No.4/29/99-P&PW (D) dated, 12.7.2000 refer.

4. Payment of DR involving a fraction of a rupee shall be rounded off to the next higher rupee.

5. Other provisions governing grant of DR In respect of employed family pensioners and re-employed Central Government Pensioners will be regulated in accordance with the provisions contained In this Department’s OM No. 45/73/97-P&PW (G) dated 2.7.1999 as amended vide this Department’s OM No. F. No. 38/88/2008-P&PW(G) dated 9th July, 2009. The provisions relating to regulation of DR where a pensioner is in receipt of more than one pension, will remain unchanged.

6. In the case of retired Judges of the Supreme Court and High Courts, necessary orders will be Issued by the Department of Justice separately.

7. It will be the responsibility of the pension disbursing authorities, including the nationalized banks, etc. to calculate the quantum of DR payable in each individual case.

8. The offices of Accountant General and Authorised Public Sector Banks are requested to arrange payment of relief to pensioners etc. on the basis of these instructions without waiting for any further instructions from the Comptroller and Auditor General of India and the Reserve Bank of India in view of letter No. 528-TA, 11/34-80-II dated 23/04/1981 of the Comptroller and Auditor General of India addressed to all Accountant Generals and Reserve Bank of India Circular No. GANB No. 2958/GA-64 (II) (CGL)/81 dated the 21st May, 1981 addressed to State Bank of India and its subsidiaries and all Nationalised Banks.

9. In their application to the pensioners/family pensioners belonging to Indian Audit and Accounts Department, these orders Issue after consultation with the C&AG.

10. This issues with the concurrence of Ministry of Finance, Department of Expenditure conveyed vide their OM No. 1(4)/EV/2004 dated 5th October, 2011.

11. Hindi version will follow.

(S. P. Kakkar)
Under Secretary to the Government of India

(Source: CG EMP.NEWS)





Sunday, October 9, 2011


Mamata's patriotic song becomes swansong for ex-servicemen

Mumbai, Sep 18 (IANS) Former railway minister Mamata Bannerjee's patriotic song for the country's armed forces and promise of railway jobs for ex-servicemen became quite a hook for many a battle-scarred ex-soldier. But now they would like to make it their swansong. Lured by the promise of a permanent job, ex-servicemen responded to a railway recruitment drive across its divisions earlier this year, in the chimeric hope of a rewarding new career.

When they finally got their appointment letters in June, however, they were shocked to find that they had been placed as cleaners, waiters, loaders, and in other menial positions. Many claim that they were short-changed even with regard to pay and other emoluments as compared with what they got in the Army, Navy and Air Force or would have got in the private sector.

One such applicant, Venkateshu Sanjiva, of Karnataka had taken part in the action in Operation Bluestar in Punjab in 1984, and also during the Kargil war. After retirement from the Indian Army as a technical-level store-keeper, he joined Reliance in Navi Mumbai, managing its labour camp on a monthly salary of around Rs.20,000. 'I responded with great hope to the Central Railway (CR) advertisement this year and quit my private job to re-join government service. I was aghast to be appointed as a cleaner in the canteen at Chhatrapati Shivaji Terminus (CST) in Mumbai,' Sanjiva told IANS. A former Army Medical Corps store-keeper, Santosh Salvi of Thane, had a similar experience: he was placed as a cleaner-cum-loader in pantry cars of long distance trains originating in CST. 'I have served in places like Assam, Himachal Pradesh and Kerala under extremely trying circumstances. Now, I am reduced to a pantry car cleaner-cum-loader after 24 years' military service,' Salvi rued.
A resident of Ahmednagar, Sunil Funde, who retired as a store-keeper (technical) in remote border areas after 25 years, is now a cleaner in the central railway canteen at CST and, at times, doubles as a waiter. Former army subedar D.V. Bhoite said he 'feels totally let-down' after getting an appointment letter as a cleaner in the CST canteen. Originally from Kolhapur, Bhoite notched 28 years in the Army and later took up a private job. He quit that in favour of what he expected would be a better job in CR.

Incidentally, while presenting the Railway Budget-2011-12, Mamata Banerjee had sung a couple of verses of a popular patriotic number and announced over 16,000 railway jobs all over India for ex-service personnel. Of these, 1,162 vacancies came up in the CR, with a stipulation that the applicant must have put in minimum 20 years in the Indian Army, Indian Navy or IAF. 'The vacancies advtised were for Group D, without specifying the nature of the jobs. So a large number ex-servicemen like us applied, though many had better-paying jobs in the private sector,' Funde told IANS. Funde said reports from other railway divisions indicate that ex-servicemen have been given jobs unworthy of their qualification or experience. 'There are many who have seen action several times in the armed forces. Now, many have been relegated to doing field jobs like tightening nuts and bolts of railway tracks, head loaders, peons, cleaners, waiters and so on,' Funde said. Others, when they learnt of the predicament of their colleagues, did not bother to take up menial jobs and have continued with their existing jobs, he added.

When contacted, a high-ranking CR official said that Group D in the central government is equal to Class IV government jobs. The official gave an assurance he would enquire into the grievances of ex-servicemen next week. Sanjiva, Bhoite, Funde and Salvi said they have decided to continue in their present railway jobs 'as we have no option'. They said they had commitments like home loan EMIs, higher education for their son or marriage of their daughters, medical expenses of elderly parents, among others, which compelled them to carry on with the railway jobs. 'We have requested CR authorities to at least give us more dignified jobs considering our academic and career backgrounds, but so far there has been no response,' Funde said, adding that 42 of them are cleaners, waiters, loaders or godown hands in the CST canteen. They unanimously said that as soon as they got better options, they would quit the railways, equally both for the low payscales and the manner in which they have been treated.

(Source-IANS :Quaid Najmi can be contacted at
DNA special: Army livid with actor Mohanlal playing army man in ads
Published: Sunday, Oct 9, 2011, 11:00 IST   
He may be Kerala’s greatest living actor, but when Mohanlal tried to mix fact with fiction and portray in real life that he was a 1971 war hero, he seemed to have gone too far. For a 45-day period stretching from December 1, 2010 to January 15, 2011, during the Grand Kerala Shopping Festival, Mohanlal appeared in a series of print and TV advertisements in army uniform, wearing an impressive array of medals and badges that mark him as a 1971 war hero, an NSG commando, a gallantry medal awardee, and the recipient of a commendation card from the army chief.

The ads also featured Amitabh Bachchan. Incidentally, Mohanlal and Bachchan were co-stars in Kandahar, a film that released in the same month. The film was made by Mohanlal’s own production house, Ashirwad Films. Guess what role Mohanlal played in Kandahar? A brave army officer and a commando.

Well, all this would have been fine but for the fact that Mohanlal had been appointed as an honorary officer in the Territorial Army by the ministry of defence in 2009. He is therefore bound by strict rules and regulations that bar him from misusing or misrepresenting his uniform. According to sources in South Block, upset army officials now want to strip him of his rank permanently.

The advertisement was noticed by a retired army officer, Brigadier CP Joshi, while on a trip to Ooty. “I was appalled to see a man who has been honoured by the Indian Army pull off something this cheap, putting on medals he clearly does not deserve. How can he claim that he took part in the 1971 war, or is qualified to make parachute jumps, or is a NSG commando,” asks a furious Joshi. “We live and die for it. How can somebody so cynically use it for commercial gain?”

Apparently, not only has Mohanlal broken the law that prohibits him from putting on medals he has not been awarded, he has also indulged in an unethical practice, deeply embarrassing army headquarters. “We gave him the uniform to give bring greater focus on the Indian Army. But he has used it for selfish commercial purposes, to portray himself as a decorated officer when he has never been awarded a medal. We are now planning to propose that his rank and uniform be taken away,” a senior army officer told DNA on condition of anonymity. According to him, “he can only use his army uniform in an advertisement to motivate youngsters to join the army. But even that requires special permission from the office of the army chief after following procedures.” The ad campaign was the outcome of a sponsorship deal between the tourism ministry of the Kerala government and Mohanlal’s Ashirwad Films, according to which the later was paid Rs50 lakh for promoting the Grand Kerala Shopping Festival (held fromDec 1, 2010-Jan 15, 2011) for a period of 45 days. “The GKSF had a sponsorship deal with Ashirwad Films owned by Mohanlal. While they publicised the 45-day shopping festival through newspapers, billboards and TV channels, we in GKSF distributed tickets of the movie Kandahar produced by them,” said KN Sathish, founder director of GKSF, who recently took over as district collector, Kasargod.

In retrospect, it appears that Mohanlal saw an opportunity to not only make some money, but also promote his latest film, which, sadly for him, bombed at the box office. But the advertisement did not have any disclosure stating that his picture in it was from a film, and most people assumed that he was sporting medals awarded to him by the ministry of defense. Under section 419 of the Indian Penal Code, such impersonation is illegal and he can be prosecuted for identity theft or fraud.

Mohanlal remained unavailable despite several attempts to contact him. His office told DNA that he was traveling abroad and could not be contacted.
(Source- DNA)

Tuesday, October 4, 2011


The latest Info brochure issued by DGR (2011) containing benefits to ESM (by all states and UTs) including the sale of cars to ORs  (Appendix 'G' on page 190) is appended below:

Please click LATEST GUIDE BOOK (2011)  for full details.

Sunday, September 18, 2011

DA hiked by 7%

New Delhi, September 15 - The government has raised the Dearness Allowance (DA) by 7% to 58%, effective July 1. Nearly five million Central government employees and four million pensioners would benefit. “Dearness Allowance of central government employees has been raised from 51 per cent to 58 per cent. The hike is effective from July 1, 2011,” Information and Broadcasting Minister Ambika Soni said after a Cabinet meeting, chaired by Prime Minister Manmohan Singh.

Soni said the hike in dearness allowance would provide major relief to the employees and pensioners as prices of essential commodities have been consistently rising. “Total financial implication due to the hike will be Rs 7,228.76 crore per annum. In the current fiscal, it will be Rs 4,819.22 crore,” Soni said.
The Cabinet also approved the Approach Paper for the 12th Five Year Plan (2012-13 to 2116-17), which targets 9 per cent growth.

(Source-Tribune News Service)

Wednesday, September 7, 2011

Cabinet Committee to decide on additional dearness allowance hike tomorrow, 8th September 2011

The Union Cabinet Committee tomorrow may decide on raising additional dearness allowance to central government employees, official sources said.

The Union Cabinet Committee likely to approve the second additional instalment of 7% dearness allowance for this year to Central Government employees and dearness relief to Central Government pensioners due from 1.7.2011.

More than 50 lakh serving employees and 38 lakh pensioners are expecting eagerly for this announcement to compensate the price hike in essential commodities and other goods.

(Source- CGS Staff news)

Sunday, August 28, 2011


1. Authorization of Pvt Ltd Banks for Disbursement of Pension to Defence Pensioner

In pursuance of Reserve Bank of India's decision on the subject, the following private Sector Banks have been authorised for disbursement of disbursement of pension to Defence pensioners:-

(a)HDFC Bank Ltd  (b)UTI Bank Ltd  (c)IDBI Bank Ltd  (d)ICICI Bank Ltd

2. Exemption of Income Tax on Liberalised Family Pension

A case was initiated by PS Dte for exemption of income tax on Liberalised Family Pension in the year 2002. After concerned efforts a Gazette Notification has been issued wef 09 Feb 2005 for exemption of Liberalised Family Pension from the income for purposes of exemption of income tax if death of the member of armed forces (including Para Military Forces) has occurred under following circumstances in the course of the military operation and duties.

(a)Acts if violence or kidnapping or attacks by terrorists or anti-social elements
(b)Action against extremists or anti-social elements
(c)Enemy action in international war
(d)Action during deployment with a peace keeping mission abroad
(e)Border skirmishes
(f)Laying or clearance of mines including enemy mines as also mine sweepingoperation
(g)Explosions of mines while laying operationally oriented mine-fields or lifting ornegotiation of mine-field laid by enemy or own forces in operational areas nearinternational borders or the line of control
(h)In the aid of civil power in dealing with natural calamities and rescue operations
(j)In the aid of civil power in quelling agitation or riots or revolts by demonstrators

3. NRI Pension- Not to be Stopped on Change of Nationality

A large number of representations were being received from Ex-sm Association/NRIs regarding stoppage of pension of Ex-Servicemen on their acquiring foreign nationality. However, in case of civil pensioners change in citizenship by anyNRI pensioners did not affect their entitlement. A case was taken up with the office of PCDA(P), Allahabad and office of CGDA, New Delhi in 2003 for bringingthe Armed Forces pensioner at par with civilian pensioners. Govt letter has been issued providing that even in the case of Armed Forces Pensioners the entitlement of pension will remain unaffected on the change of nationality and pension will continue to be paid by his/her pension disbursing agency. However, the pensioner should intimate the change of nationality as per the provision to the Pension Disbursing Agency as well as to the PCDA (Pension), Allahabad for updation of their records.

4. Two Family Pensions

The re-employed Army Personnel have been made eligible for two family pensions i.e. one from army and the other from civil side if re-employed in organizations covered under Employees Pension Scheme 1995 and Family Pension Scheme 1971.

5. Grant of Liberalised Family Pension to Widows Who Remarried Before 01 Jan 1996

The widows who remarried after 01 Jan 1996 were allowed to retain their Liberalised family Pension/ Special Family Pension while widows who remarried before 01 Jan 1996 were left out. This has been creating great injustice to pre 1996 widows. A case was taken with MoD for extending these benefits to pre 1996 cases also.MoD has issued orders vide their letter No 1(1)/2001/D(Pen-C) dated 24 Jun 2005 granting Liberalised Family Pension benefits to pre-1996 cases wef 24 Jun 2005. This will greatly benefit the widows who remarried before 01 Jan 1996.

6.  Exemption of TDS From Pension

Income Tax was hitherto deducted at source from family pensioners by the Pensions Disbursing Agency. Min of Fin (CBDT) has now clarified that family pension does not fall under the category of salary, therefore, no tax is liable to be deducted at source.

7. Ex-Gratia Award Disability Cadets (Direct)

Rates of Ex-Gratia disability award to disabled cadets have been revised from Rs600/-p.m. to Rs 2100/-p.m. wef 01 Aug 97 issued vide Govt of India, Min of Defletter No 1(6)/99/D(Pen-C) dated 15 Sep 2003.

8. Pensionary Benefits to Nk And Hav Granted Assured Career Progression (ACP)

Govt letter has been issued vide No. B/39022/AG/PS-5(Policy)/29/A/D(Pen/Sers)/06 dated 10 Jan 06 stating that pension in respect of JCOs/OR granted Assured Career Progression (ACP) upgradation, will be calculated based on the maximum of pay scale granted under ACP upgradation including 50% of the highest classification allowance, if any, of rank held and group in which paid subject to condition that  upgraded pay scale should be held continuously for 10 months preceding their discharge from service.

9. Grant of Family Pension For Life to Handicapped Children of Armed Forces Personnel

Govt letter No. PC MF-Air HQ/24229/283/-FPHC/PP&R-3(i)/582/A/D(Pen/Sers) dated29 Nov 2005 issued has made the following provisions :-
(a)Medical officer of rank of Brig/above shall be competent to render the certificate required
(b)Gaurdian shall be nominated by the pensioner instead of a court of Law. In case no such nomination has been made by pensioner in his life time the nominationshall be made by spouse of the deceased personnel
(c)The name of handicapped child shall be indicated in the PPO to be issued forgrant of Service Pension/Family Pension.

10. Merger of Dearness Relief on Disability PensionOrders were issued vide Govt of India letter No. 42/2/2004-P&PW(G) dated 15 Mar2004 for merger of Dearness Relief equal to 50% of basic pension  family pensionwef 01 Apr 2004. According to these orders Dearness relief equal to 50% was to be merged with basic pension and remaining of DR was to be calculated on (Basic pay + 50 merged DR). However no specific instruction were issued for merger of DRon disability element on pension. A case was taken up by PS Dte with the Govt who have now issued orders vide 1(62)/2004/D(Pen-C) dated 02 Dec 2005 for mergerof 50% DA/DR on disability pension to Armed Forces personnel/pensioners wef 01Apr 2004. The merger of 50% DR with basic pay shall apply to both disability element and service element simultaneously.

11. Modified Parity and Increase in Weightage JCOs/ORs

On implementation of V CPC recommendations modified parity at the minimum of pay scales was granted to officers/JCOs/OR for Pre 1996 retirees. Since the modified parity at minimum scale was not beneficial for JCOs/OR, case was taken up PS Dte with Govt to grant modified parity at maximum of pay scale for JCOs/OR. Govt has now granted modified parity to pre-1996 retirees JCOs/OR at max. of pay scale in which they have retired subject to have served for minimum 10 months in that rank. Case was also taken by the PS Dte with the Govt to increase the weightage being given to JCOs/OR as the JCOs/OR were only given 05 years weightage irrespective of rank held. Due to this anomaly no JCOs/ ORs could meet the requirement of 33 years of qualifying service to get full entitlement of pension for past as well as future JCOs/OR retirees will be as under subject to maximum qualifying service of 30 years,  details of which have been tabulated earlier. The above benefit would be applicable to Service Pension including Invalid Pension, Service element of disability pension and War Injury pension. The orders are effective from 01 Jan 2006 and no arrears are to be given. The above orders have been issued vide Govt of India, Min of Def letter No 14(3)/2004-D (Pen-Sers)/Vol III dated 01 Feb 2006.

12. Implementation of Govt Orders Regarding Abolition of the Institution of Military Adviser (Pension)

Release Medical board before retirement /discharge is held in case of any disability at the time of such retirement /discharge. An individual found unfit for continuation in service on medical ground is brought before an invaliding Medical Board prior to invalidment. Disability pension claims of LMC personnel of the Armed Forces are decided on the basis of findings of Invaliding Medical Board/Release Medical Board. The Medical advisors (Pension) from the office of DG AFMS attached to PCDA(P), Allahabad in respect of JCOs/OR and DDG AFMS(Pen)/JD AFMS(Pen)in respect of officers, were empowered to alter the recommendations of MedicalBoards. In a number of cases the recommendation of Medical Boards were being altered to the disadvantage of the individuals concerned. Consequently, aggrieved personnel were taking recourse to appeals and litigation for redressal. Based on the judgments of the Supreme Court of India and cases taken up with the MoD by theDGAFMS, a Govt letter d/d 01 Sep 05, abolishing the institution of MA(P) was issued. However, certain provisions in the Govt letter came in the way of implementation of the orders. Most of the amendments suggested by PS Dte have been incorporated by the Min of Def in the corrigendum No 1(2)/2002/D(Pen-c) dated 31 May2006. A detailed letter incorporating the provision of the Govt letters/Corrigendum and laying down procedure for adjudication of claims for disability pension/special family pension has been issued by the Dte vide letter No B/40122/MA(P)/AG/PS-5 dated 20 Jul 06.

13. Eligibility of Unmarried Daughters of Armed Forces Personnel for Grant of Family Pension beyond 25 years of age

The Ministry of Defence vide their letter No. 1(3)2007/-D(Pen/Policy) dated 25 Oct 2007 have issued instructions regarding grant of family pension to unmarried daughters beyond the age of 25 years at par with widowed/divorced daughters subject to their income from all sources not exceeding Rs. 2550/-pm.

Col H N Handa (Retd)President DiwaveDisabled war Veterans 

(Source- Report My Signal) 

Monday, August 15, 2011


In a proactive move to reduce litigation, the Army Headquarters (AHQ) has asked all army commands to ensure that contested litigation concerning retired personnel are withdrawn where the issue involved is well settled by previous judgments. The Adjutant General’s (AG) branch at AHQ has issued directives to officers in charge of litigation at the Armed Forces Tribunal (AFT) and the High Courts that cases involving settled legal position in the favour of veterans should not be contested in courts since it results in unnecessary financial strain on former defence personnel as well as the Union of India.

Sources said this is for the first time that such orders have been issued. The AG’s branch has also issued specific direction to its officers that cases where medical board recommendations in favour of disabled personnel have been wrongly overruled by administrative authorities should not be contested and should be withdrawn. The AG’s branch has also directed that cases should also not be contested where individuals with non-service related disabilities are medially boarded out with a little less than 10 years of service which is the minimum qualifying service required for invalid pension in cases of disabilities which are neither attributable to nor aggravated by service conditions.

The AG’s branch has further sensitised military authorities that individuals with non-service related disabilities should not be boarded out if they are nearing the minimum service limit of 10 years for earning an invalid pension. There is no minimum service requirement however to earn disability pension in cases with attributable or aggravated disabilities.

A large number of veterans have welcomed the AG’s directives. In recent times objections were raised by many veterans’ organisations on the tendency of the Defence Ministry of appealing against all pensionary decisions rendered by Courts in favour of defence veterans. “The directions issued by the AG is salutary move that is in line with the National Litigation Policy and which would reduce the burden on poor litigants as well as the courts, leaving time for more complex matters to be litigated,” Maj Navdeep Singh, President of the AFT Bar Association said.

The courts are flooded with pension related litigation, with disability pension claims forming the bulk. While the military authorities per se try to be helpful to disabled personnel, most of the litigation is directed towards non-adherence of rules by medical boards while determining attributability or aggravation of disabilities and towards the CDA authorities whom veterans say are insensitive to the problems of former soldiers.

(Source: Tribune News Service)

Sunday, August 7, 2011


Dear Friends,

Please read the email received from AVM RP Mishra appended below. Please also read the attachment. Kindly do your utmost to give wide publicity to the contents of the attachment, as it affects very large number of sepoys, ratings and airmen from all Three Services. The ESM organisations should make copies of the attached ORDER 12.01.2011 of Armed Forces Tribunal, Principal Bench at New Delhi, display it at prominent places under their jurisdiction and distribute copies to reach every possible city and village.

On behalf of YOU ALL, ‘i’ thank AVM RP Mishra for thanking this attachment to us.

Vande Matram - In service of Indian Military Veterans

Chander Kamboj.

From: RP Mishra, Sent: 05 August 2011 17:42

Subject: Counting of Reserve Service for pension

Dear Brig Kamboj, you had earlier published a letter on the subject of counting reserve service for pension. I am now attaching AFT judgement based on which this letter was issued. Click BELOW for the ruling


AVM RP Mishra (Retd)



Dear Veterans,

Letter addressed to Hon’ble Prime Minister of India and copy endorsed to RM and three into Chiefs is circulated herewith.

With Regards,

Jai Hind

Yours Sincerely,

Maj Gen (Retd) Satbir Singh, SM

Vice Chairman, IESM


Thursday, August 4, 2011




(source - PIB) 

Tuesday, August 2, 2011

SC questions logic behind rank pay methodology (R Sedhuraman, Legal Correspondent)

New Delhi, August 1 :The controversy over defence personnel’s rank pay, fixed on the basis of the Fourth Pay Commission recommendations, has come under Supreme Court scrutiny once again despite the fact it is a 25-year-old matter. A Bench comprising Justices Aftab Alam and RM Lodha today heard an application filed by the government for more than half-an-hour and questioned the logic behind the methodology followed for fixing the pay scales on the basis of the commission’s recommendations.

Another Bench of the SC, comprising Justices Markandey Katju and RM Lodha, had passed an order on March 8, 2010, directing the government to implement the Kerala High Court verdicts of October 5, 1998, (Single Judge Bench) and July 4, 2003, (Division Bench) in favour of the defence personnel.The government has filed an application seeking recall of the SC order on the ground that implementing the order would have a cascading effect and would involve a financial burden of Rs 1,623 crore.

Solicitor-General Rohinton Nariman said the HC had delivered the verdicts despite the fact that the defence personnel who had approached the court had not challenged either the Pay Commission report or the Army’s circular issued on June 23, 1987, explaining the methodology for fixing the pay scales.

On being asked by the Bench, the SG today presented a comparative picture of the pay scales of defence personnel and civil servants in equal positions. Stating it would like to hear the issue in detail, the Bench slated the next hearing for November 22.

Monday, August 1, 2011


No generalisation can be made about India. State a condition and its refutation will be found at once. Yet, I will risk the following five sets of generalisations, five in each set: India is admired world-wide for five things, not necessarily in that order:

The Taj Mahal
Mahatma Gandhi
Its cultural diversity
Its parliamentary democracy
Its classical arts, music, dance, architecture and handcrafting.

India is appreciated for the following five:
Its independent judiciary
Its free media
Its cuisines
Its cottons
Its cricket.

India is acknowledged for these:
Its prolific wordsmiths
Its brilliant academics
Its brave activists
Its contemporary artists and sculptors
Its technological, especially IT-related, savvy.

But, India is despaired of internationally for these five traits seen ever so often in us:
Scant respect for others’ time
Impatience with others’ views
Indiscipline in queues, on roads
Being weak to the strong, strong to the weak.

And alas, India is despised, globally, for the following:
Its stubborn filthiness
Its shocking inefficiencies
The unequal status of its women
Callousness towards human and animal suffering
The temperament that fosters galat faeda, exploitation.

Businessmen and women from the world over will reach out to India, un-drawn by the first five, un-repelled by the last, for they are in the business of making profits, not judging countries. They know India is an insatiable and undiscriminating market into which any world player can send a worm to pull it by the millions. They will reach out. Backpackers from everywhere will continue to do the same, for they don’t mind revulsion, indeed they often seek it and wallow in it. Besides, they are on a budget and how many destinations are there that can give them a ‘trip’ to heaven and hell so cheap?

Serious academics, writers and journalists will stay engaged with a country that fascinates them for all that it has been and is. But I am not thinking of India as a travel destination. I am thinking of the image of India in the world, of its standing as the integrated sum of its parts, its people. And even beyond the image, of the reality of our encounter with ourselves.

I have heard a soccer jibe in another multi-cultural country: ‘Don’t give the Indian a corner, he will open a shop in it’. The jest ranks with: ‘The Indian will pocket any insult, if it comes with a little profit as well.’

Jokes are jokes, not statements. Business is business, not charity. And Indian businessmen are not to be branded as profiteers merely because they make profits, which by their profession, they have to. But profits are one thing, exploitation is another. And where that occurs, it isn’t restricted to the business community alone; far from it.

Exploitativeness is a temperament that can be seen in varied fields. In simple Hindustani, one expression catches its sense better than the word’s lexical equivalent. And it is-‘faeda uthana’—taking undue advantage of. We are past masters in taking undue advantage of things. Be it a professional opportunity, a system, or even an appliance, we saturate its possibilities to the very limits. Animals dependent on us are, of course, singled out for faeda uthana. A bullock cart or tonga driver will twist the miserable animal’s tail and goad it with a pointed prod at its genitals to make it run faster than its limit. He is exploitative. ‘Beasts of burden’ in India carry more than burden and I don’t know of regulations to relieve their misery. Their owners are exploiting the creatures.

But even these examples of exploitative practices are yet nothing compared to bigger games in the ‘faeda’ category. The trans-India movement of cheap labour from India’s eastern states to its western and southern for contract construction work brings to mind aerial photographs of thirsty denizens of African grasslands leaving in hundreds for less inhospitable terrain. The loss of stability, and of dignity, of health and of anchoring, especially on migrating women and infants, is astounding. It’s not as if cheap labour can’t be found, even by in situ standards of faeda. The search is for cheaper labour, un-unionised, non-bargaining, abject labour which can’t even talk the local language.

Similar is the plight of people who clean India’s public spaces of filth and faeces. This has to be the most thankless task on earth. It’s also one of the least remunerated. Be it on footpaths , streets or on railway tracks and railway stations, what we have generated is manually moved by grossly over-worked, and grossly underpaid human hands. Nobody may be, technically speaking, robbing these miserable people, but ‘sanitary workers’ are being robbed of a wage commensurate with the nature, not just the volume, of their work. They are also being robbed of a fair monetary acknowledgment of the great service they are rendering to the health and hygiene of India. And, unwittingly, we are all accomplices in the exploitation.

Mostly, we are its witnesses. I can’t recall a time in India when so many prominent people are being proceeded against for having sought illegal gain, for galat faeda. As a citizen who wants the image of his country to be clean, I hope these people are found to have been innocent, not guilty. I doubt if such good news awaits us. Their acts are rooted in a temperament that uses contrivance, improvisation, cunning and sleights of hand for over-vaulting greed. Munafa, fair return, is a temperament of business. Fair competition, working on behalf of an alert market, keeps fair returns within bounds. But insatiable greed, as has landed leading Indian businessmen and their patrons in jail, blurs those bounds.

The same greed turns violent as well. The killing of brave people who have sought accounts under the Right to Information Act is an act of terror against integrity. The country deserves to know more about these people who have died because they dared to ask, on its behalf, questions about exploitation. Only a national resolve working against that temperament of exploitation can rein in al-Faeda.

(Gopalkrishna Gandhi is a former administrator, diplomat and governor -
The views expressed by the author are personal)

Saturday, July 30, 2011

DA @ 58% WEF 01.07.2011



Thursday, July 28, 2011

Life Certificates required to be submitted by Pensioners to PDAs – Yearly every November :Pension Payment Guidelines for PDAs - Certificates required to be submitted by Pensioners to PDAs


a. Life Certificate Yearly every November

b. Certificate of non re-marriage From widow recipient of Family Pension at the time of first payment

c. Certificate of non marriage/ remarriage Half yearly in May & November from unmarried daughter recipientor widow/widower.

d. Certificate of non-employment / re-employment Half yearly in May & November except employed Family pensioners.

2. Officers Authorised to sign Life Certificates : Life certificates issued/signed by one or other of the following authorities/persons can be accepted:-

-A serving or pensioned person exercising the powers of a Magistrate under the criminal procedure code (Act-V of 1898).

-A registrar or sub-registrar appointed under the Indian Registration Act 1908 (XVI of 1908). A Gazetted Officer.

-A Munsif.

-A police officer not below the rank of Sub-Inspector in charge of Police station.

-Master, a Departmental Sub-Post Master or an Inspector of Post Office.

-Officers of the RBI and other PSBs in respect of pensioners drawing pension from Banks.

-The head of the village Panchayat, Gram Panchayat or Head of an executive committee of a village.

-Retired Commissioned Officers of the Armed Forces in respect of pension bill form IAFA-319 of Commissioned Officers, departmental Officers and Warrant Officers.

3. Identification of Pensioners Identification of the pensioner is an important step before making payment and the PDA is personally responsible for proper identification and payment to the correct person. For the purpose of identification, the signature, photograph and other identification marks as recorded in the descriptive roll/identification documents are to be carefully verified. No payment should be made without proper identification. In the case of a new pensioner, he/she has also to produce his/her personal copy of the letter from the Pension Sanctioning Authority/Head of the Office informing about the grant of pension to him/her. In case of a commissioned officer, he has to produce the last pay certificate or in its absence, a declaration in the prescribed form.


The PDA will invariably verify the photograph of the Officer and specimen signature.


The PDA should verify the genuineness of the pensioner from the descriptive roll/joint photograph received from Heads of Offices/Record Offices.

FOR FAMILIES OF All types of pensioners

The PPO issued by Pension Sanctioning Authority indicates entitlement in respect of family pension to the widow/husband consequent on the death of the pensioner. The applicants are required to furnish application for grant of family pension in prescribed form along with death certificate of the pensioner. The PDAs should personally verify the genuineness of the rightful claimant with reference to available document before the payment is made. In case there is any doubt, the matter should immediately be taken up with Pension Sanctioning Authority for clarification. Payment of family pension should not be made unless genuineness of the rightful claimant is established beyond doubt.

Exemption from Personal Appearance : Exemption from personal appearance is permissible in the following cases:

--Pensioners desiring to draw his/her pension through authorised agent. For this the pensioner has to execute Indemnity Bond, and to submit life certificate once in a year.

--Pensioners of rank (high status) such pensioners may be privately identified by PDA and he need not be required to appear at a public office.

--Pensioners exempted by Local Govt. for personal appearance such pensioners have to produce life certificate in 6 months.

--Pensioners unable to appear in person due to bodily illness or infirmity. Such pensioners have to submit life certificates in 6 months.

--Severely wounded and infirm pensioners, subject to production of life certificate.

--Female pensioners who are not accustomed to appear in public. She has to produce life certificate and non-re-marriage certificate.

--Children owing to illness and very young children subject to production of life certificate signed by the official of the Revenue department.

--Armed forces pensioners(PBOR) re-employed in various institutions such as Railways, Mills or private firms of Standing, etc. subject to production of life certificate and authority for payment to a representative.

--Armed forces pensioners (other then those mentioned in clause(viii) above subject to production of life certificate once in six months on IAFA-409.

--Gorkha pensioners living in Nepal or a pensioner in Bhutan and is physically unable to draw pension in person, payment may be made through a PD in India or Indian Embassy, Nepal to a representative who produces the pensioner’s pension certificate &life certificate on IAFA-409.

--Armed forces Pensioners residing in Pauri Garhwal and Chamoli districts. Such pensioners will be required to make one journey with his representative to the Pension Disbursing Authority and state personally to him that he desires his pension to be paid in future through the representative. The PDA will record the identification mark of the representative who will be permitted to draw the pension on production of pensioner’s certificate and life certificate signed by either two male armed force pensioners or by a pensioned Officer.

--Pensioners drawing pension through Money order.

Sunday, July 24, 2011

Draft Petition addressed to the Prime Minister For Signature campaign.

To : The Prime Minister of India,
       New Delhi

Sub: Request for Scrapping of PFRDA Bill


We submit this Petition to bring to your kind notice and through your good office to the attention of the  Hon'ble Parliamentarians of our country certain aspects of the re-introduced PFRDA bill, which will have adverse impact on the exchequer in general and on the prevailing service conditions of the Civil Servants. We pray that our submissions in this regard may please be caused to be considered earnestly and the implication of the provisions of the bill critically analyzed and examined and take decision to kindly withdraw the Bill from the Parliament.

We submit the following for your critical and objective analysis of the Bill :

1.The concept of old age security for civil servant in the form of pension has a very ancient origin dating back as early as 3rd century BC, being half of the wages on completion of 40 yrs blemishless service to the king.

2. In the last century, one of the measures taken by colonial rulers to attract talented personnel to the Royal service was introduction of pension scheme for civil servants in 1920. The Royal commission through its various recommendations improved the scheme & the 1935 Govt of India Act provided it statutory strength.

3. The land mark judgment of Supreme Court in DS Nakara&othersVs Union of India (AIR-1983-SC-130) (applicable toCentral &StateGovt employees, teachers &all stake holders of pension system)conceptualised  pension stating that pension is neither a bounty nor a grace bestowed by the sweet will of the employer, but a payment for the past services rendered. It was construed as a right step towards socio-economic justice and a concrete assurance to the effect that the employee in his old age is not left in the lurch.

4. The fifth Central Pay Commission which was set up by the GOI in 1993 to go into the wage structure and pension scheme of the Central Government employees referring to the Judgment of the Supreme Court cited, observed (Para 127.6) that " pension is the statutory, inalienable and legally enforceable right earned by the civil servant by the sweat of the brow and being so must be fixed, revised, modified and changed in the way not dissimilar to salary granted to serving employees."

5. The guiding principle adopted in determining of pay package of civil servants is to spread out the wage compensation over a long peiord of time whereby wages paid out during the work tenure is low in order to effect payment of pension on retirement. As such civil service pension is rightly termed as deferred wage. While in the organized private sector the employer is required to contribute equal share to the Provident Fund of the employees, the Government neither contributes to the Provident Fund of the civil servants nor takes any pension subscription from him.

6. In an unwarranted intervention in the Statutory defined benefit Pension system, IMF in their work paper (WP/01/125,(2001) propounded the creation of a pension fund by eliciting from the Wage earners at the earliest stage of their employment so as to fetch an annuity decent enough to sustain him at the old age. In fact it was a suggestion for a retrograde change over from the defined benefit pension scheme to a defined contributory system. While suggesting so, they have categorically stated that India does not suffer demogra-phic pressure experienced by major countries, for India's population beyond the age of 60 was about 7% in
2004ch rose to 8.6% in 2010 and is estimated at 13.7% in 2030 and 20% in 2050.

7. The New contributory pension scheme enunciated byGovt of India and adopted by most of State Govts is covered by the PRFDA bill. The bill inter alia, envisages a social security scheme for all who desire to have an annuity at his old age which is voluntary and not mandatory. However, in the case of Civil Servants, who are recruited to Govt service after the prescribed cut -off date ( 1.1.2004 in GOI service) the scheme is mandatory in as much as the employee is bound to subscribe 10% of his emoluments to the Pension Fund
and the Govt. being the employer would contributes equal amount. No employee is entitled to opt out of the scheme.

8. Despite the inability to bring in a valid enactment, the Central and all State Govts other than those of West Bengal, Kerala and Tripura through illegal executive orders decided to impose contributory pension system arbitrarily onCentral and State Govt employees .While the Govt. of India notification excluded the personnel in the armed forces and para-military establishments, the Governments of the Left ruled States of W.Bengal,
Kerala and Tripura consciously continued with the existing defined benefit pension system.

9. The PRFDA Bill stipulates that there will not be any explicit or implicit assurance of the benefit except market based guarantee. The subscriber is thus exposed to the following risks at the exit.

a) If there is a major market shock, the subscriber to the New Pension scheme may end with no ability to purchase an annuity.
b) Since annuity is and cannot be cost indexed, the real worth of the annuity might fall depending upon the inflationary pressure on the economy.
c) As per the scheme, the subscriber is to make the choice of investment portfolio. The Civil Servant being mostly uninformed in finance and investment related matters, he might end up in making wrong choices which would eventually rob him of the old age pension.
d) The subscriber is perforce to contribute to the charges of the investment managers, whose priority often is as to how much profit they could make through investment of the huge corpus of pension fund in the volatile share market .

10. The pension fund created by the employees' subscription and the employers' contribution which directly flows from the exchequer ( which is nothing but tax revenue of the Govt.) is made available for the stock market operations which is not only unethical but also blatant diversion of public fund for private profit, both Foreign and Indian capitalists.

11. In the case of Civil Servants recruited after the cut-off date, the new scheme replaces the existing much better "defined benefit" pension scheme. In the process, the Government has created two classes of civil servants viz. the one with a defined benefit pension scheme and the other with the contributory pension scheme in which the employee is to part with 10% of his emoluments to become entitled for an old age social security subject to the vagaries of share market permits. Since in both the cases, the pay, allowances, perks, and other benefits, privileges, duties and responsibilities are the same it amounts to wanton discrimination of one against another which is not sustainable in law, rather violative of the existing constitutional provisions.

12. The wage structure presently designed for those who are recruited prior to the cut- off date and after is on the same premise and is depressed to enable the Govt. to meet the pension liability in future. By imposing the new contributory pension scheme on the employees who are recruited after the cut off date the Govt. not only denies the statutory defined pension benefit to them but also compel them to contribute for earning an undefined annuity, which must be characterized as highly discriminatory.

13. Those who are covered by the contributory pension scheme will become entitled for an annuity, a portion of the accumulated contribution is able to purchase, basing upon the accretion to the fund from investment. There is, however,no guaranteed minimum amount of pension for those who are covered by the new scheme, whereas the civil servants covered by the existing scheme do get a defined and guaranteed minimum pension and on his death his family members (wife, widowed and unmarred daughters and unemployed sons below the age of 25) become entitled for family pension. The discrimination factor is thus compounded.

14. The PFRDA Bill when enacted, it is rightly feared, will empower the Government to alter or even deny the present employees and pensioners the statutory defined pension benefit as has been done in the case of those who are appointed after the cut-off date.

15. It is stated that the prime objective of introduction of the contributory pension scheme is to substantially reduce the outflow on account of pension liability. The major pension liability of Government is accounted for by Armed Defence personnel. They are however excluded from the purview of the contributory pension scheme. The personnel in the Para Military forces are also excluded from the ambit of the new Scheme. While doing so, (no doubt to attract the people to serve in the armed forces for security of the Nation) the Govt. is bound to meet the pension liability from the consolidated fund of India. The argument advanced by the Govt. to cover the Civil Servants in the ambit of the new Pension scheme has been found to be unsus-tainable by the study commissioned by the 6th CPC. Shri S. Chidambaram, Actuary, in his report, (Annex to "A study of Terminal benefit of Central Government employees by Dt. K. Gayatri, Centre for Economic Studies and policy, Institute for Social and Economic change, Nagarbhavi, Bangalore) has pointed out that the Government liability on account of contributory pension scheme would in effect increase for a period spanning for the next 34 years from the existing Rs. 14,284 Cr. To Rs. 57,088 Cr. ( 2004-2038) and is likely to taper off only from 2038 onwards. The exchequer is bound to have an increased outflow for the next 34 years and will be called upon to bear the actual pension liability of defence personnel and personnel of para military forces, besides making the contribution to the Pension fund of the Civil Servants recruited after the cut off date. The specious plea that the exchequer is bound to gain due to the contributory pension scheme is therefore not borne from facts.

16. Of the present pension liability of the Govt. of India, which in 2004-05 was 0.51% of the GDP, 0.26% is accounted for by the Defence( which is 50% of the total pension liability.) The study report of the Centre for Economic Studies has concluded that the pension liability as a percentage to GDP which is just 0.5% presently is likely to decline given the growth rate of Indian economy.

17. Since most of the State Governments have chosen to switch over to "contributory pension scheme" , in fairness(from Study conducted by the Centre for Economic Studies and policy) it can be concluded that the pension liability of all the State Governments are bound to increase to three times of what it is today by 2038.

18. The first version of the PFRDA Bill was placed before the Parliament by the NDA Government in 2003. The 6th CPC set up the Committee to go into the financial implication on account of the increasing number of pensioners and suggest alternative funding methodology in 2006. The said Committee came to inescapable conclusion( 2007report) that "the existing systems of pension are increasingly becoming complicated after the introduction of New Pension scheme" and warned that "caution has to be exercised in initiating any further reforms" In the light of the conclusion of the said study report which revealed the fact of serious escalation in the pension payment outflow, the rationale of the re-introduction of the PFRDA bill in 2011 covering the civil servants is incomprehensible. Undoubtedly, the Bill when enacted into law will through the existing pensioners to a financially insecure future and the existing workers to the vagaries of the stock market. We, therefore, earnestly pray to your good-self to bring back all the civil servants including teachers irresespective of the date of entry into Government service as also those irregularly appointed within the ambit of the existing statutory defined pension benefit scheme.

We may, in fine, quoting the concluding paragraph (Page 76 of the report of Centre for Economic Studies and Policy – Institute for Social and Economic Change) of the Committee set up by 6th CPC, "Mainly given
the fact that the future liability although may be large in terms of absolute size is not likely to last very long and does not constitute an alarmingly big share of the GDP which is also on the decline. It appears that pursuing the existing 'Pay as you go' to meet the liability will be an ideal solution, appeal you, for the detailed reasons adduced in the foregoing paragraphs, that the new pension scheme enshrined in the PFRDA Bill may be withdrawn from the Parliament both in the interest of the Civil Servants and the exchequer.

With regards,

Faithfully, yours,

State : ………………….
dATE :      JULY,2011

Wednesday, July 20, 2011

Project ‘SANGAM’ for Defence Pensioners Launched - Ministry of Defence

Controller General of Defence Accounts (CGDA) Shri Nand Kishore recently launched a software project ‘SANGAM’ for defence pensioners in a function at its headquarters at Delhi Cantonment. Speaking on this occasion, Controller General of Defence Accounts mentioned that the project ‘SANGAM’ will provide useful Management Information System (MIS) to the financial planners in the Ministry of Defence. Project ‘SANGAM’ is a software which will facilitate issuance of corrigendum pension payment orders. This will address the demand from the ex-servicemen for issue of individual corrigendum pension payment order consequent to implementation of recommendations of Sixth Central Pay Commission (6th CPC).

This software project is one step forward from the project ‘SUVIGYA’ which was launched in October last year on the occasion of Defence Account Department Day and is very popular among defence pensioners. The pension payment orders to be issued using ‘SANGAM’ software will be a special corrigendum pension payment system which will contain all the basic details of original pension payment order. It will also have details of family pension, disability pension and any other type of pension available to a pensioner. The new corrigendum pension payment order is unique in the sense that it gives new ID to each pensioner which will be helpful in readily accessing all data relating to a pensioner.

There are about 18 lakh defence pensioners who will be benefitted with the launch of project ‘SANGAM’ in the long run. It will also help in grievance redressal of pensioners with regard to the correctness of payment of pension. The software has been developed in house by a team of officers from IT wing of Controller General of Defence Accounts, headed by Shri Murli Krishnan, Sr ACGDA (IT).

(Source: PIB)

Sunday, July 17, 2011

Pension Payment to central/ State Govt. Pensioners by agency Banks-Delay

Reserve Bank of India is receiving several complaints from the pensioners alleging inordinate delay in disbursing the revised pension and arrears. Position was reviewed by RBI and our Customer Service Department has issued instructions to the agency banks as under :

i) Pension paying banks should compensate the pensioner for the delay if any in crediting the pension/ arrears thereof by paying compensation at Bank Rate plus 2% penal interest for the delay after the due date automatically without waiting for any claim from them. This is applicable to all delayed pension payments made since October 1, 2008.

ii) System of attending to customer service including pension payments may be reviewed.

iii) The branch continues to be a point of referral for the pensioner lest he/she feel disenfranchised.

iv) all branches having pension accounts should guide and assist the pensioners in all their dealing with the bank.

v) suitable arrangements are made to place the arithmetic and otherdetails about the pension calculations on web, to be made available to the pensioners through the net or at the branches at periodic interval as may be necessary and sufficient advertisement is made about such arrangements

(Ref.Do.No.CSD.CO/ 8793/13.01.001/2009-10 dated April 09, 2010)
Video on 30-minutes-one-rank-one-pension.


Dearness Allowance is compensatory part of wages. In India, DA is being paid since the Second World War. During the War, DA became payable at various rates. It became payable as a result of different costs of living in different cities not known to each other. Originally, it was the textile industry in Bombay which introduced DA scheme firstly under the bipartite settlement and subsequently they took the shape of arbitration, adjudication and finally, after knocking at the doors of industrial courts, got into awards, which is how in India DA scheme started.
In other parts of the world too DA was paid depending upon the rise in the cost of consumer goods prices. Within 5-10 years, the system of DA became a common system throughout the world but the basic principles remained the same. In most parts of the world, though not everywhere, common platform DA became payable though not on the same rates.

Ultimately, the question of DA became a subject-matter of the Supreme Court. The court initially laid down general principles for fixation of DA grant and the link with cost of living index. Slowly and gradually, Supreme Court gave effect to DA in terms of rise in the cost of living, higher prices and higher cost of living. This gave rise in the whole country for Consumer Price Index which is linked with rise in index in different cities in the country. Bombay was found to be the most expensive city in the country and sometimes even in the world. It moves from time to time and so the atmosphere with it. At different times, each sphere had different price level which is recorded regularly on price index. Each price index is differently numbered and differently marked in each state. In our country, this price index as Bombay Price Index, Delhi Price Index, Kolkata Price Index, Ahmedabad Price Index etc., and prices of each number in each city are differently made and known. This is preliminary of DA.

The issue of DA has gone much ahead and now it is paid according to the standard of each city in the country. With passing of time and cost of living going up, working class life became more and more miserable as a result of which every wage fixing authority had to view its point to the phenomenon and fortunately in our country the Govt which is the biggest and model employer had to take cognizance of this fact and went on appointing pay commissions one after another after a lapse of five to 7 years and each pay commission gave thorough consideration to the problem of Dearness Allowance. Each pay commission not only increased dearness allowance of the Central Government employees and gave higher and higher benefits under the improved schemes. On the chapter on Dearness Allowance (DA), the fourth pay commission for the Central Government employees said that the “Dearness allowance which is being paid at present is in the nature of a compensatory payment to employees for erosion in the real value of their salaries resulting from price rise.

The allowance has been in existence for about four decades and now covers almost all employees in the organised sector. Accordingly, it has emerged as an important area of pay admin having financial, economic and administrative implications. Over the years, there have been many changes in the policy for payment of dearness allowance, particularly with regard to coverage of employees, percentage of neutralisation for different categories, periodicity of payment, etc. The rates of dearness allowance provided a neutralisation of about 95 per cent on the lowest pay and the neutralisation percentage went on declining for higher pay levels so that m respect of the employees drawing pay between Rs.1600/- and 2250/- per month it worked out to about 30 per cent or less. The Commission also recommended that on the price level rising above the 12-monthly average of 272 (1960=100), government should review the position and decide whether the dearness allowance scheme should be extended further or the pay scales should be revised.

Govt decided on 3 occasions to treat part of dearness allowance as dearness pay for certain purposes more particularly to provide relief in the matter of death-cum-retirement benefits to retiring employees.
The state governments also compensate their employees for price rise in the form of DA, which is granted by them more or less on the same pattern as followed by the central government, since the pay scales of state government employees are linked to different index levels, the actual rates of dearness allowance paid by them are different from those payable to central government employees.“We are also of the view that the compensation should provide full neutralisation of price rise to employees drawing basic pay upto Rs.3500/-, 75 per cent to those getting basic pay between Rs.3501/- and 6000/- and 65 per cent to those getting basic pay above Rs.6000/-subject to marginal adjustments. This compensation may continue to be shown as a distinct element of remuneration. “We have recommended that compen-sation for price rise should be sanctioned twice a year. This would ensure that there would be no uncertainty in the minds of government employees in regard to the periodicity of grant of compensation. We realise that there may be situations when government may not find it possible to sanction the compensation for price rise according to the scheme recommended by us. We are of the view that in such situations, the restraint, if any, should apply to the entire organised sector including central government employees.”

Fifth Pay Commission also said Dearness Allowance (DA) is a compensatory payment to the employees for the erosion in the real value of their salaries, resulting from price increase. While the First and Second CPC’s suggested payment of DA at flat rates for employees in different pay scales for different levels of Consumer Price Index (CPI): the 3rd and 4th CPC’s while linking DA to both the CPI and pay- scales, recommended DA as a percentage of the basic pay. While DA was made payable automatically by the first CPC once a specific level of Consumer Price Index was attained, the 2nd CPC did not favour automatic sliding scale adjustments and recommended that the Government should review the position and consider the case for an increase in DA, each time the index increased by 10 points.This they felt was necessary as allowing an automatic increase, each time prices rise, without going into the reasons for price rise, would tend to fuel inflation because of a wage-price spiral. Price increase, fuelled by a fall in production levels or due to hike in indirect taxes should not merit compensation. The absence of a precise scheme of DA revision, however, resulted in a situation where two high-powered bodies had to be appointed in the intervening period between the 2nd and the 3rd CPC for the payment of DA because of the continuing upward trend of prices.

As a result, the 3rd CPC partially reversed the recommendations of the 2nd CPC by making DA payment automatic each time the CPI rose by 8 points over the index of 200, up to the level of 272. DA until the 2nd CPC had been imagined to be a temporary expedient and was intended to deal with the phenomenon of a temporary rise in prices. It was precisely for these reasons that the pay structure then had to have three separate components: basic pay, dearness pay and dearness allowance. While basic and dearness pay represented the irreversible components, DA represented the component which could be reversed in the case of a price fall. “We have received several demands on Dearness Allowance. These range from uniform neutralization at all levels, to an alternative Consumer Price Index and the use of a monthly. 3-monthly or 6-monthlv average instead of a 12- monthly average of CPI. The merger of DA with basic pay when it comes to be 25% of the basic, pay and the exemption of DA from tax are some other demands. “It has been strongly urged that a uniform neutralisation of DA at 100% should be given to employees at all levels. We see merit in this demand.

The erosion in the real value of salary at the highest level, has been the most severe, beginning from 1949 followed by other Group A officers down the line. In contrast, a comparison of the index of real earnings for the peon between 1949 and 1996 shows that the peon was more than fully neutralized for inflation and was in real terms paid 53% more than his salary in 1949. The Secretary on the other hand was not even paid full neutralization for inflation and consequently his real salary has eroded to the extent of 72% as compared to the position in 1949. “Accordingly we, recommend that inflation neutralization be made uniform @ 100% at all levels.”So far as the newspaper industry is concerned, it normally followed the patterns of Central Pay commissions from time to time. Scheme of DA in the newspaper industry is as per recommendations of the wage boards. During the last four wage boards, dearness allowance in newspaper industry was paid as follows.

Dearness allowance through successive Central Pay Commissions The Sixth Central Pay Commission (CPC) has devoted fourth chapter of the report to the subject of Dearness Allowance (DA) payable to government servants. The sanction of Dearness Allowance is at present based on calculated six monthly increase in the All India Consumer Price Index (Industrial Workers) (AICPI-IW) with base year 1982=100.

At the time when the scales granted by Fifth CPC came into existence (1st Jan.1996) this index stood at 306.03. Fifth CPC started with calculation of DA @ 0%, from 1st Jan.1996. In April 2004 the rate at which DA was admissible had crossed the figure of 50% and therefore based on recommendations of the Fifth CPC 50% DA was merged in the basic pay. This addition to basic pay was known as Dearness Pay.

Thereafter every increase in DA was calculated on (Basic Pay + Dearness Pay). It has been observed that since after the merger of dearness pay with basic pay the base for calculation of increase in AICPI was not changed the neutralization in cost of living was presently being done at a rate higher than 100%.
The Pay Commission has pointed out that the present method of calculation for increase in cost of living takes into account the price rise in a group of identified commodities. It has compared the relative merits of “chain based” and “fixed base” methods of calculation of estimated growth in cost of living.
The AICPI as stated above is based on the increase in cost of a basket of identified commodities. In the fixed base method the calculations are based on the assumption that consumer would adjust his consumption needs in relation to increase or decrease in prices of the constituent commodities.

The chain based method takes into account the possibilities of change in consumption pattern due to availability of wider range of consumption goods and the improvement in the quality thereof due to economic growth. The latter methodology has been considered to be more relevant in today’s economic scenario. However the basic data for the pattern of consumption in respect of several essential commodities would have to be compiled through a detailed all India survey if this methodology is to be adopted .The previous Pay Commissions had different views on this matter. The Fourth CPC favoured evolution of a separate index for calculation of cost of living for the government servants. The Fifth CPC however felt that such index would also suffer from imbalances since consumption patterns of various categories of employees would be different.

The Sixth CPC has suggested a sample survey through National Statistical Commission for evolving an index based on consumption pattern of government employees. Till this exercise is completed the present methodology of calculating the increase in cost of living and calculation of DA would continue.

Views of earlier Pay Commissions

Successive Pay Commissions have made changes to the DA formula, suggesting their own methodology for determining the quantum and frequency.  Fifth CPC recommendations
The Fifth Central Pay Commission recommended uniform neutralization of DA at 100% to employees at all levels; conversion of DA into Dearness Pay each time the CPI increases by 50% over the base index with Dearness Pay counting for all purposes including retirement benefits; and Dearness Allowance including Dearness Pay being paid net of tax. The Commission did not favour the option of employing separate indices for each category of employee because of the sheer impracticality of the task and, therefore, recommended using the 12 monthly average of All India CPI (IW) with base 1982 for calculating DA. The Government of India presently calculates the level of inflation for purposes of grant of dearness allowance to Central Government Employees on the basis of the All India Consumer Price index Number for Industrial Workers (1982=100) (AICPI). The twelve monthly average of the AICPI (1982 base) as on 1st January and 1st July of each year is used for calculating the Dearness Allowance (DA). Increase in DA is calculated with reference to the AICPI (IW) average (base 1982=100), as on 1st January 1996 of 306.33. The compensation for price rise is admissible twice a year i.e. on 1st January and 1st July of each year. Only the whole number component of the percentage increase in prices is adopted for estimation of DA. The Government merged 50% of the DA with basic pay w.e.f. 1.4.04 and the dearness allowance continued to be calculated with reference to the AICPI (IW) average as on 1st January 1996 of 306.33 without changing the base consequent to the merger.Accordingly, DA at following rates was sanctioned by the Government from 1.7.04 till 1.7.07:-

As a consequence, salaries of Government employees are being neutralized more than 100%.Demands made In the demands made before the Commission, it has been suggested that the existing DA formula continue with the following modifications:-

• Instead of revising the DA once in six months, it should be revised once in three months.

• The principle laid down by the 5th CPC for merger of 50% of DA with the Pay as DP should be modified to 25% to remove distortions in the pay structures.

• DA should be paid net of taxes on the same line as recommended by the 5th CPC to make the concept of 100% neutralization somewhat meaningful.

Determining the level of inflation methodology While considering the issue of the quantum of DA admissible, the Commission considered at length the procedure for estimation of inflation. Presently, inflation as determined by the AICPI (IW), is estimated using the Laspeyere’s Fixed base methodology. The inflation index 6using this methodology captures the cost of buying a basket of goods (fixed in the base year) at current prices relative to the cost of buying the same basket of goods at base year prices. Economic theory postulates that, generally, if the price of a commodity rises vis-à-vis other goods, the consumer adjusts his consumption basket to buy less of the goods the prices of which have increased relatively and more of those goods the prices of which have fallen relatively. This envisaged shift in consumption pattern should be considered for calculating inflation. A ‘chainbase index’ captures the inflation taking into account the changes in quantities purchased consequent upon changes in the relative prices. Moreover, it also considers new products in the consumers’ basket as well as quality of the existing products improving every year. Therefore, inflation captured using ‘Chain-base’ technique would generally tend to be lower than the ‘Laspeyre’s price index’. [Under certain circumstances, however, the chain-base index could be higher than the Laspeyer’s index, i.e. if there is an increase in the price of basic items, which are necessities, having low substitutability and which form a sizeable chunk of the consumption basket. The increase in prices of such goods would result in less than proportionate reduction in quantity, thereby translating into higher expenditure in value terms. Therefore, the weightage (calculated in terms of percentage value of total consumption expenditure) attributed to these items in the construction of the composite price index would increase. This would result in the chain base price index being higher than the price index estimated using the fixed base technique.

Analysis India is on the growth path. Growth leads to wider choice with enlarged availability of substitutes. Such availability of substitutes would impact the price-demand relationship. Given this backdrop, the feasibility of developing chain base index was explored by the Commission. It was observed from the Reports of the National Sample Survey Organization on Consumer Expenditure Survey, that while expenditure data in value terms was generated through the survey, its breakup in terms of quantity and price was available only for a few items under food, clothing, bedding, etc. Data on durables consumed poses a problem as consumption of individual items is very infrequent and reporting irregular. This issue gets compounded when aggregation is attempted at the All India level.

Recommendation on chain base index:- The feasibility of developing a Chain based index is depen-dent on the availability of time series data on both prices and the corresponding quantities demanded of each item. While there is merit in developing a chain based index for capturing inflation, this would be feasible only if the Consumer Expenditure Survey generates time series data, on both quantity consumed as well as value of expenditure for fairly large list of items in the consumption basket providing the possibility of substitution over short time span. The Govt may explore this possibility. In the meantime,  Govt should keep revising base year in the existing fixed base index method as frequently as feasible.

Use of AICPI (IW) for estimation of DA:- Presently, estimation of DA for Central Govt Employees is based on the movements in the AICPI (IW) (1982=100). The Fourth Central Pay Commission, while considering the issue of suitability of the AICPI, opined that the Government should examine whether a more suitable index could be prepared for Government employees taking into account their consumption pattern and other relevant factors. This recommendation was based on the view that the AICPI does not truly represent the consumption pattern of all central Government employees. On the other hand, the Fifth Central Pay Commission took the view that consumption patterns of Group A,B,C,D employees within Government are 7bound to be different due to different income levels and hence a suitable index based on consumption pattern for Government employees as recommended by the Fourth Central Pay Commission is likely to suffer from the same set of problems which the AICPI(IW) suffers.

The Fifth Central Pay Commission opined that even though the option of employing separate indices for each category of employees did exist, it was devoid of merit because of the sheer impracticality of the task as well as needless suspicion such an arrangement was likely to arouse between various groups. Therefore, they recommended that the AICPI (IW) should continue to be the index used for calculating DA for Government employees.

The Fifth Central Pay Commission, observed that for the purpose of estimation of AICPI (IW) by Labour Bureau, the coverage of ‘Industrial Workers’ extended to 70 selected centres in seven sectors namely Factories, Mines, Plantations, Railways, Public Motor Transport Undertakings , Electricity Generation and Distribution Establishments, and Ports and Docks. A Working Class family was defined as one where one of the members worked as a manual worker in any of the seven sectors and which derived one half or more of its income through manual work defined on the basis of classification of occupations and jobs involving sufficient physical labour but at the same time not requiring much of educational background in the field of general, scientific, technical and other areas.

The Fifth Central Pay Commission also observed that in the Family Living Survey, which is the basis for estimation of the AICPI (IW), the design of the monthly family income classes is open ended, ranging from ‘less than Rs.750’ to ‘Rs.5000 and above’. The Working Class family Income and Expenditure Survey (1999-2000) for Delhi points to the fact that 53% of the families fall in the income class ‘less than Rs.5000 per month’, which is less than the minimum earning of a Government employee in Delhi. This implies that a composite price index generated from this survey may not adequately represent the price index for Government employees. This is because consumption pattern of the Govt employees vis-à-vis the ‘Working Class Family’ sample selected in the Family Living Survey would be considerably different. Recommendation The Govt of India has set up the NSC to serve as a nodal and empowered body for all statistical activities of the country; to evolve, monitor and enforce statistical priorities and standards and to ensure statistical coordination among different agencies involved. The Commission is mandated to evolve standard statistical concepts, definitions, classification and methodologies in different areas of statistics and lay down national quality standards on those statistics. The Commission is of the view that the National Statistical Commission may be asked to explore the possibility of a specific survey covering Govt employees exclusively, so as to construct a consumption basket representative of Govt employees and formulate a separate index. Meanwhile, Govt may continue to use the AICPI (IW) for estimating the DA, subject to the modifications proposed in the subsequent paras.

Revision of Base of AICPI (IW) for calculation of DA:- The Fifth CPC had adopted the AICPI (IW) using the 1982 series for estimation of DA. The Govt has developed a new series with base 2001, with effect from January 2006. It ispossible to generate the back data series with base 2001, with the help of the stipulated linking factor of 4.63. The 2001 series has an extended coverage of 78 centers compared to the 70 centers in the 1982 series. The weightage emerging from the series with 2001 base, being recent, is more representative of the current consumption basket. The Commission, therefore, recommends that the AICPI (IW) with base 2001 may, henceforth, be used for the purpose of calculating DA till it gets revised. As mentioned earlier, the base year should be revised as frequently as feasible. The Commission also looked into the weightages assigned 8to various components of consumption and the manner in which the Labour Bureau conducts the survey. The examination has revealed a direct correlation in the movement of the price index for housing and the movement of the HRA rates of Government employees. If a representative sample is used for construction of the price index for housing, there should not be such a direct correlation keeping in view the fact that for industrial workers, the escalation in rental should not be so steep for various obvious reasons. Since housing has a large weightage in AICPI (IW), there is a possibility of substantial distortion in DA calculations.

The Commission recommends that the Govt take expeditious steps to rectify these noticed distortions in the construction of the current AICPI (IW) series. The National Statistical Commission may also take these factors into consideration while evolving a separate index for Govt employees.