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Bhutan’s performance-based pay for civil servants revives debate over similar policy in India

Bhutan's Pay Structure Bill says performance-based incentives can go up to 100% of basic pay. But in India, similar policy mooted by 7th Pay Commission is still in cold storage.  

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New Delhi: In November 2015, the 7th pay commission recommended introducing Performance Related Pay — an almost corporate-like pay structure that would be determined on the basis of one’s performance and efficiency — for government employees.

The PRP, the seventh pay commission had recommended, would be based on Results Framework Documents and reformed Annual Performance Appraisal Reports and other broad government guidelines.  

But it met resistance from some IAS officers and never saw the light of day.  

With neighbouring Bhutan considering a Bill that links performance to incentives for its own civil servants, the spotlight is yet again on the policy. 

Called the Pay Structure Bill of 2022, the Bhutanese Bill was brought before the National Assembly by Finance Minister Namgay Tshering on 14 November. Under the Bill, a copy of which is with ThePrint, the government aims to introduce performance-based incentives (PBI), a variable pay policy that will be part of civil servants’ salary structure.  

The Bill has been sent to the relevant committee for vetting but it has created wide discussion and triggered a wave of curiosity among the civil service officers in that country. 

According to Bhutan’s Bill, PBI will be linked to “national, organisational and individual performance” and it could go 100 per cent of an official’s basic pay. The Bhutanese government has said that the Bill is a way to “drive meritocracy”.

While Bhutan continues to discuss introducing performance-based incentives for civil servants, it appears that the resemblant PRP is unlikely to be introduced in India anytime soon.   

An officer serving at India’s Department of Personnel told ThePrint that there were no talks to introduce the PRP in India at the moment.  

“The government will continue with the seventh pay commission [for now] as it will not go for the eighth pay commission in the near future. Of all recommendations, the government is mulling to increase the DA, but [there’s no word] on PRP,” the official told ThePrint, adding that while the 4th, 5th, and 6th Central Pay Commissions had all mentioned performance-linked incentives, it was the 7th Central Pay Commission that presented it in “a concrete manner”. 

Also Read: 28 posts, 78 DGs & ADGs in UP — why experts are calling top-heavy IPS ‘worst-managed cadre’

Split opinions on PRP

According to the Bill, the PBI is “predicated upon a robust system of measurements and performance shall be provided when the performance management system is implemented”. 

The performance-based incentive comprising components that are linked to national, organisational and individual performances could be up to 100% of the annual basic pay of the public servant’s pay to drive meritocracy and to pay competitive salary packages,” the Bill says.

In India, serving and retired civil servants that ThePrint spoke to appear to be divided over the policy.  While some believe such a performance-based policy would only serve to ensure efficiency, others say it would be difficult to base pay structure on performance.

“The seventh pay commission came up with a good recommendation about the introduction of PRP,”  a senior officer of the Indian Revenue Service serving in the finance ministry told ThePrint. “This is a corporate structure-like idea, but,  if implemented, this actually would have ensured efficiency at various levels. We have an appraisal process in place, and the PRP could have been connected to the ACR, which was mentioned in the report too.” 

ACR, or an Annual Confidential Report, is an assessment report written for each member of the civil service at the end of the financial year. It’s the main method of an annual review of a civil servant’s performance.   

However,  Arvind Mehta, a retired IAS officer who served as the secretary to the 15th finance commission, believes that PRP’s a “good idea in theory, but difficult in implementation for practical purposes”. 

“The ways to evaluate one performance generally include promotions and posting rather than working on a pay structure,” he told ThePrint. “The incentive scheme for the civil service officers in our country works like that.” 

Anil Swarup, India’s former coal secretary, believes that what would work for Bhutan may not necessarily work for India.   

“The context and circumstances in India and Bhutan are completely different,” Swarup, a retired IAS officer of the Uttar Pradesh cadre, told ThePrint. “The context and circumstances in India and Bhutan are completely different. In secretariats, there is no such determinable parameter. These kinds of structures need to be objective-oriented. This still might be possible for public sector units but not for secretariat positions.” 

(Edited by Uttara Ramaswamy)

Also Read: ‘Seek approval, or else’: How Modi govt is tightening grip on IPS in states yet again


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