Now, pay panel makes PSU execs richer

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New Delhi , May 30 : Executives in public sector undertakings (PSUs) would soon be taking home a fatter pay packet as the second pay revision committee for PSU executives has recommended a significant hike in the pay package, a higher weightage to performance-related pay (40-200%) as well as the introduction of employee stock option schemes (Esops). On the other hand, to bring in more accountability in PSUs’ functioning, units that are not making cash profits would automatically be referred to the Board for Reconstruction of Public Sector Enterprises (BRPSE).

The recommendations, submitted by the second pay revision committee to minister for heavy industries and public enterprises Santosh Mohan Dev, are expected to benefit around 2.5 lakh executives working with 247 PSUs. The seventh round of pay revision negotiations for the remaining 13.5 lakh workers are still in progress between the respective trade unions and managements.

The committee headed by Justice M Jagannadha Rao was set up in November, 2006 and was given 18 months to submit its report. The effective date of implementation for these pay proposals was January 1, 2007. PSU executives would now take home a salary of anything over Rs 3,40,000 per month as the committee has raised the range of basic pay of CMDs from Rs 55,000 to 1,00,000 depending upon the category. Over and above this, they would be eligible for allowances that would be 50% of the basic and an annual increment which could be anywhere between 2-4% of the basic pay.

The directors’ basic pay would now range from Rs 50,000 to Rs 80,000 per month. All these executive level officers would now be entitled for a risk pay which would range from Rs 1100-Rs 25,000 depending upon the performance of the PSU. The decision to formulate Esops would rest with the board of directors of the companies.

The increased pay would be linked with the performance of the PSUs. The better the PSU performs fatter would be the pay packet for the officers. The proposed hike would be not bleed the government exchequer as the PSUs would foot the bill.

“This (performance-linked increment) is definitely going to work. It has worked for many sick PSUs,” Dev said while releasing the pay committee's report. He added this was aimed at containing the outflow of professionals from the public sector to private sector mostly for more money.