Distorted facts, wrong comparisons

On April 27, a leading English newspaper published an article titled, “Our service chiefs may earn more than US generals”. This article not only distorted facts but also evoked a serious debate among our civilian and defense officers. In light of these circumstances, the article needs to be critically examined through the prism of facts and figures. While the service chiefs having taken up the cause of poor remunerations to their personnel, it would be naïve for anyone to believe that a government servant in India draws a “higher salary” than his counterpart in the USA.

The 7th Central Pay Commission (CPC) had commissioned the Institute for Defence Studies and Analyses (IDSA) to undertake a study on the “Nature, Quantum, and Components of Defence Expenditure and Defence Pensions”. This study was conducted to obtain independent feedback on pay, pension and defense expenditure in India vis-à-vis other countries. 

The study undertaken by IDSA is a comprehensive comparison of factors listed in the Terms of Reference given out by the CPC. In its inference, the IDSA study team brought out the importance of a defense force and reiterated the need to adequately earmark its budget and invest in this human resource by means of adequate compensation in line with their civilian counterparts. Unfortunately, the 7th CPC has utilised the information provided by IDSA in a partial and selective manner to justify the denial of just and fair demands made by the defense forces.

The IDSA also compared salary structures of Indian defense personnel with those in other countries, based on Purchasing Power Parity (PPP). Before undertaking the comparison, however, it stated that the comparison of salaries in PPP terms pre-supposes an identical basket of needs to be filled, which is not a fair comparison.  Moreover, the study has not factored other parameters like longer terms of engagement, assured jobs post retirement, higher pensions, and social security schemes.

The 7th CPC’s claim that “defence personnel in India are placed quite well in terms of pay, even in relation to defence personnel in countries like US and UK” (PPP salary) is an absolute distortion.  Per capita incomes in the US and the UK are many times higher.  Hence, the parameter used for comparison i.e. PPP salary/ per capita income will always lead to a faulty comparison between developed countries like US and UK and a developing country like India. 

Had the 7th CPC adopted a fair approach, a comparison should have been made with developing neighbouring countries. “These conclusions are equally applicable to civilian employees who are similarly placed,” the 7th CPC Report also states. Therefore, it is incorrect on the CPC’s part to state their perceived outcome of the study, particularly in the context of the defense forces, when the same conclusions are applicable to civilians too.

The article published in a leading newspaper has been further selective/distortive in comparing the pay of service chiefs as per 7th CPC scales to the base pay of US and UK Generals. Moreover, the comparison was done without the review due in 2016. It is imperative to understand certain facts before undertaking such a comparison. The review of pay, allowances and pensions for all Central government employees in India is done once every 10 years while a review of Military Compensations in the US is done after every four years.  Besides, factors like longer terms of engagement, assured jobs post retirement, higher pensions (up to 100 percent of pay drawn) and social security schemes have not been factored in the comparison made by IDSA.

US Generals draw 18,394.54 $ per month as base salary while in India, Service Chiefs would draw 3,846.15 $ in 7th CPC scales. Even when compared on the basis of PPP, the salary of Indian General is lower than that of the US General. This disparity will increase once pay revisions are carried out in the USA and the UK.  It should also be noted that military pensions in the USA vary between 50 percent -100 percent of pay.  

While the pension at 20 years qualifying service is at 50 percent of pay, the same increases by 2.5 percent for every additional year. Thus, for 40 years of qualified service, the pension would amount to 100 percent of pay as it would be in the case of service chiefs. Even at current rates of 2012, the US service chief shall draw a pension of $18,394.53 while the service chiefs in India shall draw 1,923.08 $ (absolute value) or 7,856.69 $ (as per PPP, 2016 rates). This disparity is also likely to increase after reviews by the UK and USA. Besides, US Base Pay figures (obtained from open domain) do not include numerous bonuses, entitlements and incentives for retention and opting for new tours of duty. Indian Officials in the ranks compared draw fixed salary with no additional remunerations.

Thus, the article in a leading English newspaper is merely an exercise in sensationalism accomplished by selective use of information from the 7th CPC Report, which itself has misused data provided by IDSA. Division of PPP Salary by Per Capita Income was never suggested by the IDSA.  If this parameter is to be used for a comparison, then it is a no-brainer that poorer the nation (lower per capita income), higher will be the salary of its officers as a ratio of its per capita income and therefore, higher the perception of salaries of its employees vis-à-vis counterparts in the US/UK/developed nations.