News in Numbers, Nov 16, 2016: Productivity to be hit?

Even as the government announced a few measures to deal with the aftermath of the announcement of the withdrawal of Rs 500 and Rs 1,000 currency notes, the opposition parties have upped their decibel levels against this move. And, the Winter Session of the Parliament commences today. After a highly productive Monsoon Session, which also saw the passing of the GST Bill, it remains to be seen how the current session is going to pan out. Let’s hope some sense prevails amidst all the noise.

9

What is it? The number of new bills that are in line to be listed, considered and passed during the Winter Session of the Parliament, which begins today.

Why is it important? With opposition parties uniting against the government on its recent demonetisation move, this session could be a disruptive one, impeding productivity. The opposition is likely to demand a discussion on the decision to scrap old currency notes in Rs 500 and Rs 1,000 denominations and seek a Joint Parliamentary Committee probe into the allegation that some, notably officials of the ruling BJP, knew about the move beforehand.

Tell me more: The nine new bills include three related to the Goods and Services Tax, one that declares the Indian Institutes of Management to be institutions of national importance and another for surrogacy regulation. This session’s agenda also lists 10 bills that have already been introduced, but are yet to be considered and passed.

 

4.2%

What is it? Retail inflation rate in October, down from 4.39% in September.

Why is it important? The rate has eased for the third straight month, to a 14-month low in October, mainly due to smaller increases in food prices. Wholesale price inflation too eased to a four-month low of 3.39% in October, compared to 3.57% in September. This easing increases the chances of the central bank’s monetary policy committee cutting interest rates again next month. The government’s recent demonetisation move is likely to reduce cash transactions, easing inflation further.

Tell me more: Last month, the monetary policy committee cut the repo rate (the rate at which the central bank lends to banks) by 25 basis points to 6.25%, which was near a six-year low.

 

2.41

What is it? The debt-equity ratio of the smallest firms (by market capitalisation) among 305 non-financial BSE-500 companies in 2015-16.

Why is it important? The debt-equity ratio is a measure of a company’s financial leverage. This study, which divided the 305 companies into four quartiles, showed this ratio was the highest (2.41) for the bottom quartile (77 firms with the smallest market cap) and lowest (0.83) for the top quartile (76 firms with the highest market cap). This goes against the popular perception that debt problems plague larger firms only. In another indicator that points to this, the average debt of the least-valuable firms is 2.3 times their market cap, against 0.32 for the most-valuable ones.

Tell me more: For both sets, their ability to meet interest expenses hit a 10-year low in 2015-16. For the least-valuable firms, the interest coverage ratio fell below 1, indicating their operating income was insufficient to meet interest costs.

 

10%

What is it? The projected salary hike to be offered by Indian companies to employees in 2017, according to Willis Towers Watson, an advisory, broking and business solutions company.

Why is it important? This is the highest among key emerging and developed markets in Asia. However, the expected rise in 2017 is marginally lower than the projected salary growth of 10.8% each in 2015 and 2016. Also, in the last two years, the actual salary growth has been below the projected figures: 10.45% in 2015 and 10% in 2016.

Tell me more: The Willis Towers Watson report says about 38% of the budget earmarked for salary increases is for top performers, against 34% for above-average and 28% for average performers.

 

20

What is it? The number of countries that have signed a framework agreement on the International Solar Alliance (ISA), a coalition-in-making of solar-resource rich countries.

Why is it important? The initiative, launched by Prime Minister Narendra Modi at COP21, Paris Climate Summit last year, has taken its first major step forward. More countries are expected to join the ISA in the coming weeks and the agreement will come into force when at least 15 nations ratify it. The ISA seeks to boost global demand for solar energy to reduce solar energy deployment prices, standardise processes and equipment for solar generation to lower hardware costs, and promote research and development.

Tell me more: The ISA would be headquartered in India, which has promised to contribute $27 million towards creating infrastructure and recurring expenditure over five years.

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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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News in numbers, Dec 4, 2015: Hike in Delhi MLAs’ salaries, rivals join hands against Uber…

15 years

 

What is it? The cut-off age for commercial trucks above which they would be banned from Delhi roads effective April 2016.

 

Why is it important? It will help cut Delhi’s rising pollution. But this alone might not be sufficient. A 2014 study by the World Health Organization said Delhi is the most polluted city globally. A report filed in the Supreme Court last year said outdoor pollution is the fifth biggest killer in India.

 

Tell me more: A couple of recent measures by the Delhi government to combat this problem include monthly car-free days in some areas and levying of a “green” tax to encourage commercial vehicles that enter the city to take alternative routes.

 

138%

 

What is it? The raise in salaries of Delhi legislators  and Ministers (to Rs 210,000 from Rs 88,000 a month), as per a bill passed by Arvind Kejriwal-led Delhi government. It has been sent to central government for approval.

 

Why is it important? If approved, Delhi’s MLAs will get more than MPs (members of Parliament) at Rs 140,000 per month and surpass Himachal Pradesh legislators, the highest paid at Rs 125,000 per month. Those in favour of hike argue MLAs will be less prone to corruption, and attract better and honest talent into politics. Singapore cites the high salaries of the members of its parliament as a reason for its clean and efficient government.

 

Tell me more: Opposition parties including the BJP and Congress have opposed the hike. While BJP taunted the Aam Aadmi Party (literal translation: Common Man’s Party) by calling it ‘Khas Aadmi Party’ (literal translation: Special Man’s Party), Congress said that the party is misusing public funds to give extra perks to their legislators.

 

125,000

 

What is it? Number of children under five years of age who die due to foodborne diseases every year, according to World Health Organization’s (WHO) estimates.

 

Why is it important? Though children under five years of age make up just 9% of the world’s population, they account for nearly a third (30%) of deaths that occur from eating contaminated food every year. This is the first ever attempt to estimate the number of global deaths due to foodborne diseases by the WHO.

 

Tell me more: As many as 420,000 people die as a result of foodborne diseases annually and one out of every ten fall ill from contaminated food. Diarrhoeal diseases account for over half of the deaths due to foodborne diseases.

 

4

 

What is it? Number of taxi-hailing apps (that is, Ola from India, Didi Kuaidi from China, US-based Lyft and Malaysia’s GrabTaxi) that have entered into an agreement where passengers would be able to use services of all these companies using one app globally.

 

Why is it important? It’s a counter to Uber’s expansion into newer countries. The California-based taxi app is present in 67 countries. By joining hands they can put up a tougher fight. Uber is already struggling with regulatory and competitive challenges in a few markets.

 

Tell me more: An example under the agreement would be: Ola customers can use the same app to book a Didi Kuaidi cab when they travel to China or the services of Lyft when they go to the US, instead of opting for Uber’s services.

 

0.5 million

 

What is it? Number of tweets posted related to Chennai rains, rescue, relief operations, within 24 hours (as of Thursday morning).

 

Why is it important? Social Media platforms Twitter and Facebook have been a major way of communicating, coordinating relief efforts to help people in Chennai as it battles the worst-ever rains in nearly a 100 years. This, especially at a time when all telephone lines and networks are jammed and calls are not going through.

 
Tell me more: The social media sites were flooded with requests asking for stranded people to be rescued, help for pregnant women going into labour, elderly people stuck without food, medicines or people requiring urgent treatment for some health problems

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