The chairman and managing directors (CMDs) of profit-making Central public sector enterprises (CPSEs) can hope for a handsome 300 per cent jump in their basic pay if the government accepts the recommendations of the Second Pay Revision Committee. However, their total remuneration will depend a lot on the performance of the company since most incentives are linked to profits.

De-linking its recommendations from those of the Sixth Pay Commission for government employees, the Committee under retired Supreme Court judge M Jagannadha Rao, has introduced for the first time a profit-linked component in the salary structure of CPSE executives. Called ‘risk pay’, it will be part of their fixed pay and vary between Rs 1,100 and Rs 25,000, depending on the paying capacity of CPSEs. If a CPSE is loss-making, its executives will not get any ‘risk pay’.

Minister for heavy industry and public sector enterprises Santosh Mohan Dev, who received the report today, said, “Never in India’s history has such a hike been proposed. Hopefully, this will stop CPSE executives from being lured by the private sector.” The pay revision, if accepted by the government, will be effective January 1, 2007. Dev said the report has been presented to the Prime Minister’s Office (PMO) and the Finance Ministry. “They may like to approve it and place it before the Cabinet. Otherwise, they can refer it to a committee of secretaries (CoS), which can also hear grievances, if any, of the CPSEs,” he added.

The Second Pay Revision Committee has suggested classifying existing CPSEs into five categories based on their turnover, manpower and geographical spread of operations. Accordingly, five sets of pay scales have been formulated. A new category A+, comprising largely profit-making Navratnas, has been introduced over and above the existing A, B, C and D categories.

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