Air India’s debt-laden wings ✈

Rs 30,748 crore

What is it? The annual cost of various allowances paid to central government employees and pensioners as approved by the Cabinet on Wednesday.

Why is it important? The approved sum is nearly 5% more than the estimates of the 7th Pay Commission in 2016, at Rs 29,300 crore for allowances. The total financial impact, including salaries, had been estimated at Rs 102,100 crore then.

Tell me more: It was approved after the Committee on Allowances, headed by Ashok Lavasa, submitted its report in April this year.

 

Rs 52,000 crore

What is it? The amount of debt in the books of Air India. Indian government decided yesterday to privatise the state-owned national carrier.

Why is it important? The debt ($8 billion) makes its equity valuation zero or negative, and is the biggest hurdle to its sale. Of this, around Rs 22,000 crore is a loan to purchase aircrafts. The committee is likely to hive off its assets and divest the profit-making subsidiaries.

Tell me more: Private carriers had a domestic market share of 87% in May, 2017, with Air India’s share decreasing over time.

 

6

What is it? The number of countries, with a Muslim majority, whose resident must have a close family tie to a US resident or formal ties with a US entity to be eligible for a US visa.

Why is it important? The latest guidance from the US State Department comes after the US Supreme Court on Monday said the controversial travel ban cannot be imposed on anyone who has “a credible claim of a bona fide relationship with a person or entity in the United States”. The apex court allowed parts of the travel ban, earlier blocked by lower courts, while it reviews the rest of the order by the Donald Trump administration.

 Tell me more: The US Supreme Court will review the full order in autumn.

 

10 years

What is it? The age of the iPhone, Apple Inc’s flagship device, launched on June 29, 2007.

Why is it important? The smartphone, with seven versions so far, has sold more than a billion times since launch. The anniversary brings into focus the future of the gadget as in 2016, Apple saw the volumes of the iPhone take a beating, which slid further in 2017.

Tell me more: In the second quarter of 2017, despite declining volumes, the iPhone brought in more revenue: $53.25 billion from 50.76 million phones compared to the year before sales of 51.19 million phones for $32.86 billion.

 

774

What is it? The number of people invited from 57 countries to join the group choosing the annual Oscars, the most popular movie awards.

Why is it important? The Academy of Motion Picture Arts and Sciences which conducts the Oscars says the group of 2017 comprises 39% female and 30% coloured invitees. The Academy had come under fire for leaning heavily on white male membership in its awards panel, reflected in its choice of nominees and awards. The criticism of the lack of racial diversity reached a crescendo in 2016, with the #OscarsSoWhite discussion.

Tell me more: Indian actor, Priyanka Chopra, recognised for her lead turn in ‘Quantico’, a US TV show, is among the invitees.

 

In India, more births happen in the latter half of the year. Is there a reason for it? Check out our latest story for Mint at http://bit.ly/2sjjMNY

Read More

7th Pay Commission: How big is the opportunity and where the gains will be delivered?

This piece originally appeared on Livemint.com

 

For the 3 million-odd central government employees, the Pay Commission is a decadal harbinger of hope, outlining their salary increments for the next 10 years. For consumer-facing businesses, especially makers of automobiles, consumer goods, electronic items and houses, it’s a window of opportunity to tap the greater disposable income in the hands of the staff of India’s largest employer.

They are looking at one such imminent opportunity, with the release of the report of the Seventh Central Pay Commission last month. Just how big is this opportunity? How is it spread across various categories of employees? And where are the large pockets?

An estimate of all three facets can be made by juxtaposing data from two reports. The first is the latest Pay Commission report. It gives salary details of the old pay buckets of central government employees, their reorganization into a new pay matrix and the salary increase in each.

The second report is the latest census of central government employees. Although released in 2014, it provides data as on March 2011, counting 3.1 million employees. It gives details of 1.45 million such employees in 73 Indian cities, or 47% of all government employees. Crucially, it breaks up this 1.45 million by their old pay buckets.

For these 1.45 million employees, we used these two data sets to work out their current salary and new recommended pay, and thus their increment. Further, we classified them under three categories: Group A (estimated salary range: Rs.56,000 toRs.3.1 lakh), Group B (Rs.44,000 to Rs.2.08 lakh) and Group C/D (Rs.22,000 to Rs.1.14 lakh).

We estimate that if the Seventh Pay Commission recommendations are implemented, these 1.45 million employees in 73 cities will see their collective salary increase by Rs.22,932 crore, or about 21%. Even within this set, the top 25 cities account for 80% of central government employees and 82% of estimated salary gains. Put another way, these 25 cities account for 38% of the potential Pay Commission gains.

Use the visualization below to see how many central government employees are there in each of these cities, how they break up by various groups and how much they stand to gain from the Seventh Pay Commission.

 

Methodology

The starting point was the way government salary is structured. Broadly, there are three components: pay band, grade pay and allowances. At present, there are four pay bands and 15 levels of grade pay.

Current salary framework

The first pay band is Rs.5,200-20,200. Within this, there are five grade-pay progressions: 1,800, 1,900, 2,000, 2,400 and 2,800. For example, Mr X got a job at this pay band. His basic pay would be Rs.7,000 (Rs.5,200 derived from the pay band and Rs.1,800 as grade pay).

If he stays in the same designation, he would progress within a particular grade pay, with an annual increment of 3%. If he gets promoted, he would still be in same pay band, but will get a higher grade pay of Rs.1,900. In other words, to check the seniority of a government employee, ask their grade pay. The grade pay ranges from Rs.1,800 for Group C employees to Rs.10,000 for Group A officers.

The sum of pay band and grade pay is basic pay. Most allowances, notably dearness allowance (DA) and house rent allowance (HRA), are calculated on basic pay.

The Seventh Pay Commission assumed current DA of 125%. So Mr X would receive Rs.8,750 per month as DA (125% of Rs.7,000). The HRA quantum varies across cities. If Mr X lived in Delhi, he would get an HRA of 30% of basic pay, or Rs.2,100 per month.

Thus, the sum total of Mr X’s salary is Rs.17,850: Rs.7,000 basic pay, Rs.8,750 DA and Rs.2,100 HRA. This is the lowest possible salary in central government service today.

New salary framework

The Seventh Pay Commission has recommended doing away with the system of pay band and grade pay. In its place come 18 levels, with 1 being the lowest and 18 the highest (cabinet secretary). Broadly, the 15 grade pays are matched with different levels. For example, grade pay of Rs.5,400—what an entry-level Group A officer would get—is now level 10.

The yearly increment is now called pay progression. For each level, the number of pay progression possible ranges from 1 to 40. If he doesn’t get promoted, Mr X will move from 1 to 40 over the next 40 years.

The 18 levels, representing a hierarchy, are arranged horizontally. Pay progression is arranged vertically. The combination of these two is the pay matrix, with 18 columns and 40 rows.

Salary increase

The Pay Commission combined the current basic pay and DA to derive the new basic pay. Next, it increased salary by 16% on this new basic pay. This amounts to 2.57 times the current basic pay. For Mr X, the new basic pay would be Rs.17,990, as compared to Rs.7,000 now. On top of this will be new HRA, calculated at 24% of basic pay.

Basic pay: Rs.7,000 (current); Rs.17,990 (recommended)

DA: Rs.8,750 (current)

HRA: Rs.2,100 (current); Rs.4,318 (recommended)

Total: Rs.17,850 (current); Rs.22,308 (recommended)

Mr X, because of the Seventh Pay Commission’s recommendation, will now see a 25% increase in salary.

Increase for 73 cities

Now that we know the different levels of earnings of government employees, the next step is to estimate the number of employees at each of the different levels in different cities.

For this, we tapped the Census of Central government employees. Although released in 2014, it shows data as on March 2011, counting 3.1 million employees. This contained details of how many central employees were there for 73 cities. Further, in each of the cities, there were details of the number of employees in each grade pay.

We matched this data with the pay matrix suggested by the Seventh Pay Commission. Multiplying the number of employees at each grade pay will give the total salary bill, sliced for each city and for different levels.

We made two assumptions:

1. City-wise age data was not given. So, we took the age break up for all central government employees from the Pay Commission report, and applied it across cities. There were four age groups (20-30 years, 30-40 years, 40-50 years and 50-60 years). We divided pay progression (of 40 steps) for each level into four equal groups.

So, in level 1, we averaged the first 10 steps in the pay progression, and assigned this amount to 20-30 years. Approximately, 22% of employees are in 20-30 years. The total number of employees was multiplied by 0.22. Multiplying the two numbers gave us the salary bill for 20-30 year olds in level 1. We repeated this for other age groups and across levels.

2. The second was related to the sole grade pay band applicable both Group B and Group A employees; we assigned equal employees to both groups. Further, in some cases, Census data has given one employee count by combining two grade pay. Here, we apportioned half the employee count to each grade pay.

Read More

News in numbers, Nov 20, 2015: Indian aviation’s passenger growth, Jan Dhan Yojana’s progress…

 

Rs 18,060 crore

What is it? Salary arrears paid to government of India employees, current and former, in 2008, when the last round of pay revisions, as per the recommendations of the 6th Pay Commission, happened for them.

Why is it important? The 7th Pay Commission, which submitted its report yesterday, has recommended a 23.55% increase in emoluments for 4.8 million government employees and 5.5 million pensioners. The expected cost of implementation in 2016-17 is Rs 1,02,000 crore. Along with recipients, consumer companies will be keenly watching the handout figures as they typically spur big-ticket purchases like vehicles and electronic items.

Tell me more: Back in 2008, the 6th Pay Commission came at a fortuitous time for the economy, which was reeling under the global credit crisis, and the arrears effectively handed government employees a windfall to spend. Consumer companies will be looking for an encore.

 

 

1

What is it? Number of collectives, as opposed to individuals, in the 58 nominees listed by Time magazine’s for ‘person of the year’. The collective is ‘refugees’.

Why is it important? This century, collectives have been bestowed the Time ‘person of the year’ award as many as six times: the whistleblowers (2002), the American soldier (2003), the Good Samaritans (2005), you (2006), the protestor (2011) and Ebola fighters (2014).

Tell me more: This year’s list features three people with an Indian connection: Indian Prime Minister Narendra Modi, Reliance Industries chairman Mukesh Ambani and Google CEO Sundar Pichai.

 

 

36.5%

What is it? Percentage of bank accounts set up under the Pradhan Mantri Jan Dhan Yojana with no money in them, as of November 11. This is a significant improvement from the 55.8% in April 2015.

Why is it important? The opening and operation of these bank accounts is critical to the government’s plan to shift to a welfare regime that is based on cash transfers directly into bank accounts of beneficiaries. One of the pet schemes of this government, it has had to face the criticism for opening millions of bank accounts that are lying dormant. The latest numbers show an uptick.

Tell me more: Among the three categories, private sector banks have the maximum percentage of zero-balance accounts (41.1%) and regional rural banks the least (36.2%). For public sector banks, the figure is 36.3%.

10

What is it? Number of months in calendar year 2015, till October, in which domestic airlines in India posted double-digit growth in passengers flown. In October 2015, domestic airlines recorded growth of 19.96% over October 2014.

Why is it important? The steady rise in passenger traffic is part of the troika of factors that is driving the comeback of the beleaguered Indian airline sector, which has piled up about $12 billion of accumulated losses in the past eight years. The other two factors working in the sector’s favour today are low fuel prices and relative stability in airfares.

Tell me more: In 2015, July saw the highest year-on-year growth in passenger traffic (29.6%) and September the lowest (14.5%).

 

 

32%

What is it? The jump in the share price of Canadian company Lucara Diamond after it announced it had found the world’s second-largest gem quality diamond in its mine in Botswana, one of its two key assets.

Why is it important? As discoveries go, a diamond this size is fairly rare, though the company is yet to decide when or how to sell it. Meanwhile, the stock movement of Lucara highlights the windfall potential in the business of precious stones: one find erased the entire loss in Lucara’s market value in 2015.

Tell me more: The prized stone is a 1,111-carat diamond. It is second in size only to the 3,106-carat Cullinan, found in South Africa in 1905.

Read More