2nd Pay Revision Committee Benefits for executives of CPSEs

As per Government resolution number No.2(10)/06/DPE-WC dated 30 Nov 2006 Government of India constituted a 2nd Pay revision Committee under the chairmanship of Retired Judge Supreme Court Of India Mr. Justice M. J. Rao. The committee had to devise the new structure of pay, allowances, perquisites, and benefits for the Board level & Below Board level executives and Non-unionised supervisory staff of Central Government Public Sector Enterprises (CPSEs). It had the tenure of 18 months.

The 2nd pay revision committee had submits the report to the GoI. GoI & DPE further discussed the report with the various central departments & the Committee of Secretaries. Finally Department of Public Enterprises which is the nodal body for Public Sector Undertakings, had issues the 2nd PRC order number No.2(70)/08-DPE (WC) on dated 26 Nov 2008. The revised pay scales for the executives of PSUs are as follows.

Name of ScaleExisting Pay ScaleRevised w.e.f. 01.01.2007

Salient features of 2nd PRC in PSUs

Uniform Fitment benefit

Uniform fitment of 30%, on basic pay plus D.A. (78.2%) as on 01.01.2007 would be provided to all executives of CPESs. Formula for the benefit

New basic pay = O.B.P + O.B.P XI.D.A.+ (O.B.P + O.B.P X I.D.A)X30%

Where O.B.P = Old Basic pay as on 01.01.2007

             I.D.A. = Dearness Allowances as which was 68.8% on 01.01.2007. But due to 50% D.A. merger effective I.D.A. was taken as 78.2% for the pay revision

So if X person has a basic pay of 8600 as on 31.01.2007, his revised basic pay will be calculated like

New basic of X = 8600 + 8600X78.2% + (8600 + 8600X78.2%)X30%

=  8600 + 6725.2 + 4597.56

=  19922.6

After rounding off the amount, the new basic pay of candidate will be Rs 18880 as on 01.01.2007.

Annual increments Rate

Yearly increment rate will be at the rate of 3% of revised basic pay. Suppose someone has a 18880 basic pay, after one increment his/her basic pay will be 19450.

House Rent Allowances (HRA)

HRA for the Public sector employees will  provided by the CPSEs as per following table

Cities PopulationHRA % of Basic Pay
50 Lakh and Above30%
5 to 50 Lakh20%
Less than 5 Lakh10%

The revised HRA will be paid from the date of issue of pay revision order for the PSU.

Perks & Other Allowances

The Board of Directors of the Central Public Sector Enterprises will have a authority to decide the Allowances available to the various categories of executives with a ceiling of 50% of Basic pay. It means allowances can’t be more than half of a employees basic pay. Many CPSEs like NTPC, BHEL, GAIL, SAIL, IOCL, BPCL, HPCL, BEL, HAL, etc are following the cafeteria approach which allows executives to choose from perks and allowances. Like HRA, payments of perks will be applicable from the date of issue of 2nd pay revision order for the PSU


The limit for the gratuity of the employees of the PSUs would be raised to 10Lakh w.e.f. 01.01.2007.

Performance related pay (PRP)

2nd Pay revision Committee has taken a huge step to link the pay of an executive with his/her performance and same has been following in private companies. This would surely attract the young talent in Government Companies and boost the performance level of the employee as well as the PSU. The PRP has been directly linked to the profit of the Public Sector Unit & the performance of the executive. The percentage ceiling for the PRP will increase from Junior to Higher grade  and same is explained in below table

Scale% of Basic Pay
E0 to E340
E4 to E550
E6 to E760
E8 to E970
Director (C&D)100
Director (A&B)150
CMD (C&D)150
CMD (A&B)200

Superannuation Benefits: After implementation of 2nd PRC report, CPSEs are allowed 30% of Basic Pay as Superannuation benefits. Benefits included in this scheme

  1. Employers Provident Fund (12%)
  2. Gratuity
  3. Post Retirement medical Benefit
  4. Pension

The CPSE has to make the arrangements for superannuation funds or they can operate through insurance companies on fixed contribution basis. The amount of Pension, Gratuity, and post-retirement benefit will be decided based on the returns from the scheme adopted by a CPSE.

Benefits for the Employees appointed after 2nd pay revision

Most of the time newly recruited employees are fixed at the minimum of the pay scale in which they are recruited. Suppose Y employee is recruited on July 2007 on E1 (16400-40500) pay scale. Then he/she will be given starting basic pay of 16400 from the date of appointment.

Now if we compare the basic pay of employee X (who appointed in July 2006) and employee Y (appointed in July 2007) after the implementation of 2nd pay revision, the difference in initial basic pay will be of Rs 3530 which is about to 21.52% of the current basic of executives. It also means that employees those who are getting appointments in PSUs after 01.01.2007 are paid 21.52% less from the employees who joined before 01.01.2007 on same cadre or pay scale. So we can say that existing employees of CPSEs get benefited more due as compared to new recruits at the same level due to the 2nd pay revision.

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