Pay revision of regulators - downward revision?
Sandeep Parekh -
Thursday, October 09, 2008 3:16 PM
Looks like the pay of regulators is on its way down. Here is a brief
recap of the facts. The Board level members of the regulators today get
a pay equivalent to an assistant secretary, the Chairperson gets the
pay of a secretary (the exception being the Reserve Bank of India (RBI)
governor). By contrast the staff of the regulators (I can speak of RBI
and SEBI for certain) gets a pay which is higher in comparison to
government pay. While I don't know the history of when this occurred in
the RBI, SEBI follows this higher pay structure of RBI (with a few
differences) at the staff level.
The 6th Pay Commission
recommended that the Board level members (whole time members of the
Board) of five regulators be paid a higher salary disconnected with
governmental pay, the government has accepted something different. See page 40 of a chart which contains the Pay Commission recommendation and the decision of the government.
The Commission's recommendation was to give a pay of:
a) Rs. 150,000 per month to members and Rs. 200,000 p.m. to the Chairperson where a car and house are provided.
b) pay Rs. 250,000 per month to members and Rs. 300,000 p.m. to the Chairperson where a car and house are not provided.
This is indeed generous from today's pay structure levels.
However, what was accepted was:
a) pay Rs. 250,000 per month to members and Rs. 300,000 p.m. to the Chairperson where a car and house are not provided.
b) Incumbents can choose between present pay (say around Rs. 25,000 pm) with car and house or higher pay without house and car.
This
pay structure is not at all generous and is weird because it is silent
about new member/chairperson's choice of car/house i.e. what happens if
the new appointee wants the car and house?
Let me explain the
financials in some more detail, a house in Mumbai in a respectable
south Mumbai area (3 bedrooms - in areas where the regulators today in
fact stay, so this is not a hypothetical) would cost upwards of 200,000
rupees per month. To afford that, a person must earn approximately Rs.
300,000 before tax is paid. This is not possible within the revised pay
structure. Add to this the cost of buying one's own car, and the option
without car and house looks attractive only to those who are already
rich and who already own a property/car in Mumbai. Hardly a means of
attracting talent from the market into the regulator. A rational person
who is not rich, would choose an option where a car and house is
provided by the regulator and is faced with the choice of a vacuum -
what does he get if he/she so chooses? No answers in the revised pay
scale. I think the government needs to relook what it has accepted -
and it ought to accept the recommendations of the Commission instead of
making this semi cooked meal if it is serious about attracting market
talent to the regulatory bodies.
Conspiracy theorists will
immediately jump and claim that this is a conspiracy of the bureaucrats
to limit pay of others below their own. My take is that it is just a
poorly thought decision and can easily be corrected.
Note:
the five regulators are Telecom Regulatory Authority of India,
Insurance Regulatory and Development Authority, Central Electricity
Regulatory Commission, Securities and Exchange Board of India and the
Competition Commission of India