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.

2nd PRC Pay Scales for the PSUs Applicable from 01.01.2007
GradeOld Pay ScaleRevised Pay Scale
E06,500 – 200 – 11,35012,600-32,500
E18,600 – 250 – 14,60016,400-40,500
E210,750 – 300 – 16,75020,600-46,500
E313,000 – 350 – 18,25024,900-50,500
E414,500 – 350 – 18,70029,100-54,500
E516,000 – 400 – 20,80032,900-58,000
E617,500 – 400 – 22,30036,600-62,000
E718,500 – 450 – 23,90043,200-66,000
E820,500 – 500 – 26,50051,300-73,000
E923,750 – 600 – 28,55062,000-80,000

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

2nd PRC HRA Rates
City 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

Performance Related Pay Criteria
Executive GradeCeiling (% of Basic Pay)
E0 to E340
E4 to E550
Director (C&D)100
Director (A&B)150
CMD / MD (C&D)150

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.

5 thoughts on “2nd Pay Revision Committee Benefits for executives of CPSEs”

  1. In deciding fitment benefit, whether additional financial impact (afi) on account of pay revision w.e.f.1.1.2017 to 28.2.2018 to compare with 20% of average PBT for last 3 yes or took ati for 2017-18 only, implementation in the PSU. clarify pl.

  2. Thank you for your reply, I was referring this issue from 2nd Pay Revision effective from 01/01/2007.

    Recruitment & also appointment happened in the year 2006. Appointment letter was issued by the organisation on 5th December 2006 and company only asked to join on 2nd January 2007 whereas officer wanted to join on 26th December 2006.

    In the above case whether fitment benefit is eligible to the officer. If yes, is there any circular or authority whom can be approached for clearance. The company is under administrative control of MOPNG.

    • There is a process to make aware management about it. First, you should write to management through a proper channel about the injustice. Further, you can prepare a draft notice by an advocate and send same to management. Wait for 6 months and move to CAT citing the reason that both employees appointed in the same month via same advertisement, same post, same batch etc. And the employer is discriminating the basic on the basis of date of appointment. I hope this will work for you. Your case is genuine and you are eligible for the fitment.

  3. Reference to the above, I would like to know that if an officer who is recruited / appointed before 1/01/2007, appointment letter issued by the company in Dec. 2006 and recruitment is completed in December 2006, and the company ask the officer to Join on 02/01/2007 whereas the officer wanted to join on 26th Dec, 2006, whether he is eligible for fitment benefit, since the appointement / recruitment is already done in the December 2006 ?

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