Wednesday, April 26, 2006

Main Article - May, 2006

ROLE OF DEARNESS PAY IN DETERMINING ENTITLEMENT OF ALLOWANCES AND ADVANCES

Ch. Srinivasa Rao, Under Secretary, CSIR, New Delhi



Introduction

Dearness Allowance is normally granted to Government of India employees to compensate them for the rise in cost of living beyond average Consumer Price Index 306.33 as on 1-1-1996, i.e., with effect from the date of implementation of the recommendations of the Fifth Central Pay Commission. Dearness Relief is paid to the Govt. of India pensioners on the same lines.

The Fifth Pay Commission vide para 105.11 of their Report had recommended that the Dearness Allowance (DA) should be converted into Dearness Pay (DP) each time the CPI increases by 50% over the base index used by the Fourth Pay Commission. This recommendation was duly approved by the Govt. of India. The present compilation aims at explaining the concept of DP and its role in drawal of pay and allowances, and other entitlements in the career of a Govt. servant.

Merger of DA
In pursuance of the recommendations of the Fifth Pay Commission, , the Govt. of India merged the Dearness Allowance equal to 50% with Basic Pay (BP) with effect from 1-4-2004. It is being shown distinctly as Dearness Pay in respect of all its employees. The Autonomous Bodies which are following Govt. pattern of pay scales/allowances have followed suit. DA will be computed on the basis of Basic Pay, Stagnation Increment and Non-Practicing Allowance and also the Dearness Pay which constitutes 50% of the DA merged and is Dearness Pay being drawn by a Govt. servant w.e.f. 1-4-2004..

Effect on retirees
As in the case of Govt. employees, the Dearness Relief (DR) that is being drawn by the existing pensioners equal to 50% of their pension was merged with pension and is being shown distinctly as Dearness Pension.

In order to ensure that the employees retiring between 1-4-2004 and 31-1-2005 do not face any loss in fixation of pension, DA equal to 50% of the basic pay is being treated as basic pay for purposes of computation of pension as a special dispensation, in respect of basic pay received by such pensioners prior to 1-4-2004. Consequently, the element of Dearness Pension will exist only for such pensioners retired/retiring up to 31-3-2004.

Dependency criteria
In terms of SR 2 (8) and GIO (3) of FR & SR of Swamy's Compilation on T.A. Rules, the Dearness Relief (including Dearness Pension) should not be included while calculating the income limit of pensioner/family pensioner dependent on a Govt. servant for LTC purpose.
Inclusion of Dearness Pay

The Dearness Pay would count for all purposes allowances like DA, entitlement of Compensatory (City) Allowance (which is computed on the basis of BP + Stagnation Increment + DP + Non-Practising Allowance) retirement benefits, transfer grant, Licence fee, monthly contribution towards GPF/CPF, monthly contribution for CGHS, entitlement of various advances, determining the eligibility limit for drawal of GPF advance for calculation of Deputation (Duty) Allowance, subject to the prescribed ceiling (Pay plus Deputation (Duty) Allowance). However, there is no change in the ceiling prescribed (maximum of the pay scale of deputation post) for Deputation (Duty) Allowance.

Exclusion of DP
Entitlements for LTC/LTA, TA/DA while on tour and transfer and entitlement of Govt. accommodation would continue to be governed on the basis of the basic pay alone. Since the Transport Allowance is paid on the basis of "scale of pay" and not on "pay", the DP will not be taken into consideration for this purpose.

Licence fee can be recovered from Dearness Relief but not from the Dearness Pension.

As in the case of all other Central Govt. employees, DP will be computed @ 50% of the Basic Pay (excluding NPA) for Doctors also. NPA shall, however, be paid on Basic Pay plus DP only. The maximum limit on drawal of BP + NPA which was hitherto limited to Rs.29,500/- has been modified to the extent that BP + NPA shall not exceed Rs.44,500/-.

Pension/Family pension
Pension would now be calculated at 50% of the average emoluments in all cases subject to 50% of the highest pay in the Govt. plus DP. The highest pay in the Govt. w.e.f. 1-1-1996 is Rs.30,000/-. The highest pension as of now comes to Rs.22,500/- (Basic pension Rs.15,000 + DP Rs.7,500). Dearness Pay is counted for retirement benefits. Pension shall be calculated at 50% while family pension at 30% of the pay/pension plus Dearness Pay/Dearness Relief, subject to a minimum of Rs.1,913/-, and maximum of 50% on the 30% respectively of the highest pay plus DP.


Thus, the existing pensioner/family pensioners are eligible for the following:


Pensioners/Family Pensioners
Entitlements
(a)
Existing pensioner/family pensioner
drawing pension/family pension as
on 1-4-2004
(i)
(ii)
(iii)
Basic pension/family pension
plus dearness pension/dearness family pension (i.e. dearness relief equivalent to 50% of basic pension/family pension as on
1-4-2004)
plus dearness relief on both (i) and (ii) above
(b)
Family pensioner whose family pension sanctioned prior to 1-4-2004 but became payable on or after 1-4-2004
(i)
(ii)
(iii)
Basic family pension
plus dearness family pension (i.e. dearness relief equivalent to 50% of basic pension/family pension as on 1-4-2004)
plus dearness relief on both (i) and (ii) above
(c)
Pensioner/family pensioner whose pension/family pension sanctioned
on or after 1-4-2004
(i)
(ii)
Basic pension/family pension
plus dearness relief


Grant of advances
The provisions under General Financial Rules, 1963 relating to advances for purchase of Motor car, Personal computer, Motor cycle/Scooter/Moped/Bicycle and festival advance, and financial relief to the families of Govt. Servants who die while in service have been duly amended as detailed hereunder:

Purpose of
Advance
Eligibility
Amendments/Remarks
Motor car
Basic Pay + Dearness Pay taken together is not less than Rs.15,750/-
For first/subsequent occasion, up to eight months’ Basic Pay + Dearness Pay
Motor cycle/
Scooter/Moped
BP + DP is not less than
Rs.6,900/-
Quantum of advance admissible for the first occasion, four months’ BP + DP; for second or subsequent occasion
Bicycle
BP + DP not exceeding Rs.7,500/-
---
Festival advance
BP + DP not exceeding Rs.12,450/-
---


Financial relief
to family of
deceased Govt. servant
Rs.8,000/- (max.)
Quantum of relief equal to two months’ BP + DP or Rs.8,000/- whichever is less
House Building
Advance for
construction/ purchase
34 months’ of BP + DP,
subject to a max. of
Rs.7.50 lakhs
34 months’ BP + DP subject to a max. of Rs.7.50 lakhs or repaying capacity for construction/purchase whichever is less. The cost ceiling limit is revised to 134 times the BP+DP, subject to a min. of Rs.7.50 lakhs and max. of Rs.18.00 lakhs, relaxable up to a max. of 25%. HBA sanctioned under the provisions of O.M. dated 9-8-2004 need not be re-opened.
HBA for
enlargement of existing house
Rs.1.80 lakhs (max.)
34 months’ BP + DP without any change in minimum and maximum ceiling limits


CGHS subscription
The dependency criteria for availing medical facilities under CGHS which was raised to Rs.1,500/- p.m. would include income from all sources including pension and pension equivalent of DCRG benefit and excluding (i) the relief on pension sanctioned after Dec. 1995, and (ii) Dearness Pension granted w.e.f. 1-4-2004.
The slabs for CGHS contribution effective from 1-4-2004 would be as under:

Basic pay plus Dearness Pay or Basic Pension plus Dearness Pension

Monthly subscription
Upto Rs.3000
Rs. 15.00
Rs.3001 to Rs.6000
Rs. 40.00
Rs.6001 to Rs.10000
Rs. 70.00
Rs.10000 to Rs.15000
Rs.100.00
Rs.15001 and above
Rs.150.00


Further, the entitlements for free diet, Nursing Home facilities, Ward entitlements in CGHS recognized private hospitals, etc. are revised as detailed hereunder w.e.f. 1-4-2004. However, there is no change in the entitlements in respect of existing CGHS cardholders:

Pensioners who join the scheme w.e.f. 1-4-2004 or from a subsequent date and make payment of CGHS contribution on the basis of their last Basic Pay plus Dearness Pay would continue to get the same "ward-entitlement" as they had while in service.

If a pensioner opts to make payment of CGHS contribution on the basis of his Basic Pension plus Dearness Pension resulting in payment of CGHS contribution in a lower slab as compared to payment on the basis of last Basic pay plus Dearness Pay, such pensioner would correspondingly get a lower entitlement of ward.

Eligibility
Basic Pay + Dearness Pay or Basic Pension + Dearness Pension
Free diet
Up to Rs.6,075/-

Free diet for employees suffering from TB or Mental disease

Up to Rs.9,000/-
Consultation with the Specialists in Govt./ State Govt. hospitals directly

Rs.18,000/- and above
Pay slabs for determining the entitlement of accommodation in private hospitals recognized under CGHS: General ward:
Semi-Private ward:
Private ward:


Up to Rs.11,250/-
Rs.11,251 to Rs.15,750/-
Rs.15,751/- and above


Pay slabs for determining the entitlement of Nursing Home facilities in CG/State Govt./Municipal hospitals

Pay slabs for determining the entitlement of accommodation in AIIMS, New Delhi:
General ward:
Private ward:
Private ward/Deluxe ward:
Rs.11,250/- and above

Rs.15,750/-
Rs.15,751 to Rs.20,250/-
Rs.20,251 and above

Pension/family pension
The minimum Basic Pension continues to be Rs.1,275/- in respect of those retired up to 31-3-2004. In such cases, Dearness Relief equal to 50% of present pension will be merged with pension and shown distinctively as Dearness Pension. However, on conversion of 50% Dearness Relief into Dearness Pension w.e.f. 1-4-2004, the Basic Pension/Family Pension in the case of those retired on or after 1-4-2004 should not be less than Rs.1,913/-.

Since the re-employed pensioners and absorbees are not eligible for Dearness Relief, the question of conversion of 50% DR into DP does not arise.

Pension by Postal Money Order
At the request of the Pensioner, pension up to Rs.2,250/- p.m. plus Dearness Relief on pension admissible from time to time may be remitted by Postal Money Order at the Govt. cost payable from the month of July 2005 onwards. In case of pensioners who retired prior to 1-4-2004, the term Pension would include Dearness Relief also.

Fee payable to Consultants
The fee payable in case of retiring Govt. servants engaged as full-time Consultants is up to Rs.13,000/- and for part-time Consultants, it was Rs.6,500/-. On merger of 50% DA with basic pay w.e.f. 1-4-2004, the fee in respect of Govt. servants retired on or after 30-4-2004 and engaged as Consultants could now be fixed up to Rs.20,000/- for full time and up to Rs.10,000/- for part-time. In addition, they may also draw their pension and relief thereon. It should be ensured that the fee plus pension plus dearness pension should not exceed the last pay plus dearness pay drawn thereon.

The fee for those who retired on or after 30-4-2004 and engaged prior to issue of these orders has to be refixed w.e.f. 16-3-2006.

In case the Consultants are to be engaged at a fee higher than the limit prescribed, approval of the Appointments Committee of the Cabinet (ACC) has to be obtained.

As there was no element of DP prior to 1-4-2004, fee of those Govt. servants who retired on or before 31-3-2004 shall remain Rs.13,000/- for full time and Rs.6,500/- for part-time per month.

Casual workers
In respect of Casual workers who are conferred with temporary status, 50% of the DA merged with the Basic Pay will be admissible w.e.f. 1-4-2004. For the purpose of computation of daily rates of wages, Casual workers who are "entitled" to daily rate of wages with reference to the minimum of the pay scale for corresponding regular Group D official will also be admissible for 50% of DA merged with Basic pay. However, those who are engaged on part-time basis and those who are entitled to daily wages not linked to the minimum of the pay scale for corresponding Gr. D employees, are not entitled to the above benefit.

References
1. Swamys Compilation of FR-SR (Part IV) (2004)
2. GI MF O.M.No.105/1/ 2004-IC dated 1-3-2004
3. GI MF O.M. F.No. 1(1)/2003-E.II(B) dated 1-3-2004
4. GI DP&PW O.M. No. 42/2/2004-P&PW(G) dated 15-3-2004,
5. Swamysnews, Apr. 2005, 88-89
6. GI MF OM No. 1(13)/97-E.II(B) dated 30-4-2004; Swamysnews, Aug. 2004, 31-32
7. GI MF OM No.105/1/2004-IC dated 26-5-2004; 7-6-2004 & 11-6-2004; Swamysnews, Aug. 2004, 32-33
8. GI DP&PW OM No. 42/2/2004-P&PW(G) dated 21-6-2004; Swamysnews, Aug. 2004, 33-34
9. GI DP&T OM No.49014/5/2004-Estt.(C) dated 31-5-2004; Swamysnews, Aug. 2004, 36
10. GI MF OM No. 105/1/2004-IC dated 7-6-2004; Swamysnews, Oct. 2004, 97
11. GI MF O.M. No. 12(1)/E.II(A)/2004 dated 8-10-2004; Swamysnews, Nov. 2004, 17-20
12. GI MUD O.M.No.1-17011/2(2)/2004-H.III dated 9-8-2004;Swamysnews, Nov. 2004, 20
13. GI MH&FW O.M. No.S-11011/6/98-CGHS(P) dated 20-9-2004; Swamysnews, Nov. 2004, 23-25
14. GI MUD O.M. No. I-17011/2(2)/2004-H.III dated 15-10-2004; Swamysnews, Dec. 2004, 5-6
15. Swamysnews, May, 2005, 87
16. Swamysnews, July, 2005, 79
17. GoI MF O.M.No.1(5)/2005-E.II(B)/746 dated 7-10-2005; Swamysnews, Nov. 2005, 10-11
18. GoI DP&PW O.M.No.45/1/2004-P&PW(G) dated 26-10-2005; Swamysnews, Dec. 2005, 10-11
19. GOI MH&FW O.M.No.S-11011/6/98-CGHS(P) dated 28-10-2005; Swamysnews, Jan. 2006, 15-17
20. GOI MF (CGA) Lr. No.V.16011/141/98/CTR/R-360/2005-06/432-62 dated 2/5-1-2006; Swamysnews, Feb. 2006, 8
21. GoI DOPT O.M.No.16012/12/2005-Estt.(Allowances) dt. 16-3-2006; Swamysnews, April, 2006, 18-19
22. GOI DOPT O.M.No.41/13/2005-P&PW(G) dt. 1-2-2006; Swamysnews, April, 2006, 19-20
23. GOI Railway Board's Lr. No.F(E)II/2004/DE1./1 dt. 9-12-2005; Swamysnews, April, 2006, 35
24. Swamysnews, April, 2006, 90
.o.
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