Pay revision of regulators - downward revision?

Sandeep Parekh — Thu, 09 Oct 2008 09:46:00 GMT

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

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Initial Private Opinion : 6th pay commission

Pay revision of regulators - downward revision?