News in Numbers, June 10, 2016: Road accidents in 2015, drug abuse problem in Punjab is real…

Rs 200 crore

What is it? The amount Micromax Informatics is planning to invest in its Uttarakhand facility over the next year to make split and window air conditioners.

Why is it important? The handset-maker is looking to grow into a consumer durables company with an aim to generate about a fifth of its revenue from this segment in the next 12 months. Diversification into new businesses is likely to help Micromax boost its overall revenues as it lost its market leader position to Samsung in the smartphones segment last year.

Tell me more: The firm, which entered into the television business in 2014, earns 12% of its revenue from this segment.

945 – 2039

What is it? The estimated range of premature deaths due to outdoor air pollution per year per million people in India by 2060, according to a report.

Why is it important? The number was 508 in 2010. India is likely to continue to be among the worst affected countries even by 2060. Its impact on GDP is estimated to be 0.9% by that year.

Tell me more: The economic impact is calculated based on increased worker sick days and healthcare costs and, damage to crops. Globally, outdoor air pollution could cause 6-9 million premature deaths by 2060 with an economic cost of $2.6 trillion a year by 2060 or 1% of GDP, according to the Organisation for Economic Co-operation and Development.

 

11%

What is it? Percentage of passenger vehicles that were sold to government employees in 2015-16, up from approximately 10% in 2014-15.

Why is it important? Car makers are expecting this to go further up with the implementation of the Seventh Pay Commission in the current fiscal even as they faced slower growth in May with car sales declining by 0.86%. Along with government pay hikes  the monsoon cheer is likely to result in a consumption-led demand and more profits.

Tell me more: Government employees accounted for 16% of Maruti Suzuki’s domestic sales in 2015 and for Hyundai and Honda, the corresponding figures are 7.2% and 15% respectively,

 

501,423

What is it? The total number of road accidents in India in 2015, according to a report released by the government.

Why is it important? Youngsters in the age group of 15-34 years accounted for over half of the people killed in road accidents. The cause of the accidents is mostly cited as driver’s fault – over three-fourths of the road accidents were due to the driver’s fault and within this category, over 60% (each) of road accidents caused and people killed were due to over-speeding of drivers. Some activists have argued that citing drivers’ fault as the reason is the easiest way to close a case – because other possible causes such as faulty vehicle parts, bad roads or inadequate lighting/signs are difficult to establish. The latest death toll is yet another reminder that too little efforts are taken to solve the problem.

Tell me more: On an average, 17 people died every hour in road accidents in 2015. Road accidents killed 146,133 people last year (139,671 in 2014) and injured 500,279 (493,474 in 2014).

 

174

What is it? The minimum number of people charged under the Narcotic Drugs and Psychotropic Substance (NDPS) Act, who have died in Punjab prisons in 2014 and 2015, according to an analysis.

Why is it important? Highlights the seriousness of the drug abuse problem in the state, which has been at the top consistently or ranked among the top five in many of the metrics used to measure this abuse. There are 836 drug users per 100,000 population in Punjab (as per a 2015 survey) compared to the All-India figure of 250 per 100,000 (2012). The average rate of crime under the NDPS Act has been the highest in the state between 2005 and 2014.

Tell me more: The drug abuse problem in Punjab became a point of debate after the Censor Board decided to cut off all drugs-related references to Punjab in a Hindi film titled ‘Udta Punjab’. It quickly turned into a political issue after Congress and Aam Aadmi Party accused the BJP of influencing the Censor Board to prevent showing Punjab’s drug abuse problem (the party has denied it). The state, which is ruled by the Akali Dal-BJP combine, goes for state elections next year.

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Seventh Pay Commission payout: Finding the ‘missing $15 billion’ in Budget 2016

This piece originally appeared on Livemint.com

 

A Bloomberg report on Wednesday titled “Missing: $15 billion lost somewhere in India’s 1,500-page budget” raised a red flag on the Indian government’s balancing of its books in Budget 2016. It pointed out how the global financial data provider and other analysts were unable to locate the numbers allocated for implementing the recommendations of the Seventh Pay Commission (SPC), which doles out the once-in-10-years pay hike given to central government employees. The allusion was the government may have understated this payout—and, by extension, its deficit.

We tried to locate those “missing” numbers in the same budget documents. First, we need to know how much it will cost the government to implement the SPC recommendations. The estimate for 2016-17 by the SPC is a 24% increase in payouts to government employees, or Rs.102,100 crore (around $15 billion).

 

g_mission1_web

 

The first place to look for is under non-plan expenditure, and a table titled “Estimated strength of establishment and provision thereof”. This details how many employees are there in 56 government departments (excluding defence) and how much the government has budgeted to pay their salaries: an increase ofRs.65,690 crore in 2016-17. Thus, we have accounted for around 65% of SPC’s impact.

 

g_mission2_web

 

The second place to look for is pensions, the details of which are again provided under non-plan expenditure. This shows the government has budgeted for an increase of Rs.37,066 crore.

 

g_mission3_web

 

Thus, the total increase in salary and pension bill in 2016-17 is Rs.102,756 crore. However, there is one rider. The pension liabilities include increased outgo on account of implementing the One Rank One Pension (OROP) scheme.

Implementing OROP is estimated to cost the government Rs.7,500 crore. Deducting this amount means the government has budgeted Rs.95,256 crore to meet SPC recommendations. In other words, the net shortfall in budget estimates on account of implementing the SPC is Rs.6,844 crore.

What’s “missing” is $1 billion and not $15 billion.

 

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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.

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