Dear Sir,

1. The Govt of India, Ministry of Defence letter No: No.1(27)/2017-D(Pay/Services) dated 06 Jul 2018 deals with fixation of pay of Officers of the rank of Lt Col (Level 12A) and Colonel (Level 13). Many Officers have approached me to explain the implications of this letter both to the Serving and Retired soldiers. The ibid Government letter dated 06 Jul 2018 is a clarificatory letter as certain anomalies were introduced by 7th CPC by which defence services officers were drawing less  pay than those of CAPFs as in Jan 2016 and thereafter. This is due to incorrect fixation of Index of Rationalisation (IOR)  which was fixed at 2.57 for Lt Cols and Cols whereas their counterparts in CAPFs were fixed at IOR of 2.67.

IOR Vs Multiplication Factor of 2.57

2. Index of Rationalisation (IOR). Many of us do not understand the difference between IOR and Multiplication factor 2.57 recommended by 7thCPC. Most of us tend to believe both are same. IOR is a factor when multiplied with Entry pay gives the total initial pay of any soldier from rank of Sepoy to Lt Gen (HAG+) as on Jan 2016 in the Def Pay Matrix. The IOR is linked to Degree of responsibility exercised by all ranks and therefore it  is higher for higher ranks as CPC felt higher ranks have higher degree of responsibility. Of course this principle is not followed by 7th CPC when they recommended IORs of various ranks. The IOR of Lt Col to Brigadier is same at 2.67. Does it mean a Lt Col who is now a Coy Cdr and Brigade Cdr have same degree of responsibility? COAS has lesser IOR than Army Cdrs. Can it be explained why so by 7th CPC? The first cell in the Def Pay Matrix is worked out by multiplying IOR with Entry Pay for that rank. Thereafter, second cell for various ranks is enhanced by multiplying the first cell by 1.03 (3% increment). In this manner the Def Pay Matrix is made for all ranks. Def Pay Matrix lays down the pay of all serving soldiers as on Jan 2016. It is not that your pay or pension as on Dec 2015 is multiplied by 2.67 if IOR is enhanced to 2.67 for Lt Cols and Brigs. Your pay or pension in Jan 2016 will continue to be your pay in Dec 2015 x 2.57. IOR is therefore more relevant to serving soldiers and is used in making Def Pay Matrix for Serving Soldiers. For example if Pay of Soldier in Dec 2015 is Rs 10,000 and his pay in Jan 2016 has to be minimum of Rs 10000 x 2.57 = Rs 25,700. Thereafter one has to go Def Pay Matrix and see if Rs 25,700 is there. This is because his pay as per 7th CPC should be IOR x Entry Pay. Generally you may not find Rs 25,700 in the De Pay Matrix. Then you have to go to next cell where figure higher to Rs 25,700 is available. Say it is Rs 26,200. Then the pay of this soldier is fixed at Rs 26200 pm + DR as on Jan 2016. Then next year his pay will be increased by 3%.  Therefore you have to understand IOR is different than Multiplication Factor of 2.57.

3. Multiplication Factor. The 7th CPC recommended enhancement of minimum pay of Rs 7,000 in 6th CPC to Rs 18,000 in 7th CPC. Therefore, the multiplication factor = 18000 / 7000 = 2.57. Therefore the minimum pay in Jan 2016 has to be Pay or pension in Dec 2015 x 2.57. Even if IOR is enhanced to 2.67 the pensioners will not get benefitted as their pension in Jan 2016 = Pension in Dec 2015 x Multiplication Factor of 2.57. But you have to understand the pay of serving soldiers is pay in Dec 2015 x 2.57. Then this figure is seen in Def Pay Matrix and his pay in Jan 2016 is closest to this figure ( pay in Dec 2015 x 2.57) ad explained in para 2 above. Therefore, Multiplication factor of 2.57 is used even for fixing pay of serving soldiers in the Def Pay Matrix. I will explain this with an illustration.

4. Enhancement of IOR to 2.67 to Lt Cols and Colonels. The ibid Govt letter dated 06 Jul 2018 clearly mentions when the IOR of Lt Cols and Cols was fixed at 2.57 initially. Therefore, their initial pay as on Jan 2016 in the first cell of Defence Pay Matrix was Rs 1,16,000 for Lt Cols and Rs 1,25,700 for Cols. This is the minimum pay for these officers as on Jan 2016. However if pay in Dec 2015 multiplied by 2.57 is higher than Rs 1,16,000 for Lt Cols or Rs 1,25,1700 for Cols,  then one has to go to next cell in Def Pay Matrix where figures higher than Rs 1,16,000 and Rs 1,25,700 are located. That will be pay in Jan 2016. Every year the pay will be enhanced by 3% as increment.

5. Effect of Increased IOR of 2.67 on Pay of Serving Soldiers. The first cell in Def Pay Matrix is arrived by multiplying  IOR  with Entry Pay.  Higher the IOR, therefore, higher is the pay for serving soldiers in Jan 2016 in the Def Pay Matrix. The first cell is multiplied by 3% to arrive at pay in next year.  Therefore, the next cell in Def Pay Matrix is previous cell x 1.03 (or 3%). On the other hand the multiplication factor of 2.57 is to bring pay or pension of Dec 2015 onto pay or pension in Jan 2016. You must understand this difference between IOR and Multiplication factor.

6. Enhancement of IOR to 2.67. Service HQ intervened and brought the down gradation of pay scales of Lt Cols and Cols in 7th CPC to the notice of Central Government due to incorrect fixation of IOR at 2.57 whereas that of equivalents in CAPFs was fixed at 2.67. The Govt of India accepted the argument of the three service HQ and enhanced IOR to 2.67 for Lt Cols and Col vide their letter dated 06 Jul 2018. This has resulted in higher figure in first cell of New Def Pay Matrix (with IOR of 2.67) and subsequent cells. Since the first cell = IOR of 2.67 x Entry Pay, this entails making a new Def Pay matrix. Every subsequent cell for any rank in the Def Pay Matrix is enhanced by 3%.  As increment is 3%, then if the first cell has higher figure, then subsequent cells also have higher figures in the new def pay matrix with IOR of 2.67. You can see the first cell of Lt Col with IOR of 2.67 is Rs 1,21,200 (vis – a – vis Rs 1,16,700 when  IOR was 2.57) and first cell of Col is Rs  1,30,600 (against Rs 1,25,700 when IOR was 2.57). In summary when IOR was enhanced to 2.67 the pay in first cell of New Def Pay Matrix in  Jan 2016 of Lt Cols and Cols went up by Rs 4,500  (Rs 121000 – 116700) for Lt Cols and Rs 4,900 (Rs 130600 – 125700) for Cols. You can make out the subsequent cells also undergo change by 3% with IOR of 2.67 compared to subsequent cell of pay matrix with IOR of 2.57.

7. To understand the implication of enhancement of IOR to 2.67, let us take an example of two Lt Cols i.e. Lt Col AK Singh and Lt Col DS Thakur. The pay of these two officers i.e. Pay in Pay band and Grade pay is say Rs 45,000 and Rs 48,000 respectively in Dec 2015. Let us see what their pay is in Jan 2016 with IOR 2.57 and IOR of 2.67.

8. Lt Col AK Singh. His pay in Jan 2016 = Pay in Dec 2015 x Multiplication Factor of 2.57 = Rs 45000 x 2.57 =  1,15,650. But the first cell in Def Pay Matrix when IOR was 2.57 is Rs 1,16,700. Therefore his pay in Jan 2016 is fixed in first cell of Def Pay Matrix which is Rs 1,16,700 with IOR of 2.57. But when IOR goes up to 2.67 his pay in the first cell is Rs 1,21,200. Therefore his gain because of IOR of 2.67 is Rs 121200 – Rs 116700 = Rs 4,500 pm + DR. In subsequent years, his pay will go up by 3% over Rs 1,21,200 pm. So this officer has gained substantially by IOR of 2.67.

9. Lt Col DS Thakur. His pay in Jan 2016 = Pay in Dec 2015 x 2.57. This comes to Rs 48000 x 2.57 = Rs 1,23,360. But the next cell higher in pay matix with IOR of 2.57 is Rs 1,23,807. His pay in Jan 2016 is fixed at Rs 1,23,807 with IOR of 2.57.  But when IOR went up to 2.67, the cell in pay matrix next to Rs 1,23,360 is Rs 1,24,800.  His pay in Jan 2016 in now fixed at Rs 1,24,800 pm + DR. The gain is Rs 124800 – Rs 123807 = Rs 993. Though Rs 993 is small, yet it is gain. The gain is dependent upon where the next cell which contains higher figure of Pay in Dec 2015 x Multiplication Factor of 2.57. Some people get higher gain and some get lower gain but everyone will get some gain in pay when IOR is enhanced to 2.67.

10. If you have not understood the above, then let me summarise the effect of increased pay of Lt Cols when IOR  is 2.57 and when IOR went upto 2.67 in a tabular form for better comprehension.

Description Lt Col AK Singh

(Figs in Rs) Lt Col DS Thakur

(Figs in Rs)

11. You can work out the gain in pay for Colonels when IOR has been enhanced to 2.67 if you have understood the basic concepts of IOR and Multiplication Factor of 2.57. The Ministry of Def vide para 6 of their ibid letter dated 06 Jul 2018 says if pay fixed with IOR  of 2.57 is more than IOR of 2.67 then such over payment if made will not be recovered. You can see this is silly & stupid para which is not required as there is no way pay with IOR of 2.57 will be more than pay with IOR of 2.67. This is simply the way lower level babus of Desk Officer, Under Secretary, Deputy Secretary level to save their back side unnecessarily mention such clauses to confuse readers and to guard themselves against any legal cases in case someone goes to court of law.

12. All serving soldiers have been asked to exercise option to come on to pay scale of 7th CPC within 3 months. If the option has been exercised once there is no need to exercise option second time just because IOR has been changed to 2.67. This is extra paper work. How do you expect a Dy Secy to think on these lines? Therefore para 8 of ibid Government letter dated 06 Jul 2018 is again superfluous. This is how Min of Def dominated by lower level babus issue letters without application of mind.

Warm regards,

040-48540895