REPORT OF THE SECOND PAY COMMISSION Royal Government

Transcription

REPORT
OF
THE SECOND PAY COMMISSION
Royal Government of Bhutan
March, 2014
Report: The second Pay commission of Bhutan
TABLE OF CONTENTS
1
EXECUTIVE SUMMARY ...................................................................................... 1
2
BACKGROUND................................................................................................... 6
3
2.1
Establishment of the Pay Commission.......................................................... 6
2.2
Composition of Members............................................................................ 6
2.3
Secretariat for the Commission from the Ministry of Finance....................... 6
2.4
Tenure and Terms of Reference.................................................................... 6
GUIDING PRINCIPLES ...................................................................................... 8
3.1
Objectives................................................................................................... 8
3.2
Principles.................................................................................................... 8
4
METHODOLOGY................................................................................................. 9
5
CURRENT ECONOMIC SITUATION.................................................................... 10
5.1
Real Sector.................................................................................................. 10
5.1.1 Investment................................................................................................... 11
5.1.2 Consumption..................................................................................... 11
5.1.3 Consumer Price Index (CPI)............................................................... 12
5.1.4 Household Consumption Expenditure............................................... 13
5.1.5 Housing............................................................................................. 13
5.2
Fiscal Sector............................................................................................... 16
5.2.1 Domestic Revenue............................................................................ 17
5.2.2 Expenditure...................................................................................... 18
5.2.3 Public Debt...................................................................................... 18
5.3
Monetary Sector ...................................................................................... 19
5.3.1 Money Supply and Credit.................................................................. 19
5.3.2 Interest Rates..................................................................................... 20
5.4
External Sector
...................................................................................... 21
5.5
Impact of Current Economic Situation on Real Income.............................. 22
i
6
7
8
fiscal space
...................................................................................... 23
6.1
11th FYP Projection..................................................................................... 23
6.2
Medium Term Fiscal Framework (MTFF) as of December 2013................... 23
6.3
Expenditure Rationalization........................................................................ 25
6.4
Revenue Enhancement................................................................................ 25
growth trends: civil and public service............................................... 27
7.1
Civil Service
...................................................................................... 27
7.2
Other Public Service................................................................................... 29
Recommendation for revision of pay and allowances................... 30
8.1
Salary Revision: Reference Period............................................................... 30
8.2
Prime Minister, Cabinet Ministers and Equivalent Post Holders.................. 30
8.3
Members of Parliament............................................................................... 33
8.4
Holders, Members and Commissioners of Constitutional Bodies................ 33
8.5
Privy Council
8.6
Office of Attorney General......................................................................... 36
8.7
Other Public Servants (GSP, ESP, NFE, RAPA, LG, Para,
Consolidated Contract)............................................................................... 36
...................................................................................... 35
8.7.1 General Service Personnel (GSP) and Elementary
Service Personnel (ESP)...................................................................... 36
8.7.2 Non-Formal Education (NFE) Instructors............................................ 37
8.7.3 Consolidated Contract (mainly Teachers)........................................... 37
8.7.4 Royal Academy of Performing Arts (RAPA)......................................... 38
8.7.5 The Local Government...................................................................... 38
8.8
Civil Servants
...................................................................................... 40
8.8.1 Compression Ratio............................................................................ 41
8.9
9
Personal Income Tax (PIT)........................................................................... 43
ALLOWANCES AND BENEFITS............................................................................ 44
9.1
Lumpsum Allowances.................................................................................. 44
9.1.1 Red Scarf Allowance.......................................................................... 44
9.1.2 Patang Allowance.............................................................................. 44
ii
9.1.3 High Altitude Allowance.................................................................... 45
9.1.4 Difficulty Area Allowance.................................................................. 45
9.1.5 Uniform Allowance........................................................................... 46
9.1.6 Radiation Allowance......................................................................... 47
9.1.7 Cash Handling Allowance ................................................................ 47
9.1.8 Overtime Allowance.......................................................................... 47
9.1.9 Communication Allowance............................................................... 48
9.1.10 Leave Encashment (LE)................................................................... 48
9.1.11 Leave Travel Concession (LTC)........................................................ 48
9.2
Salary Based Allowances............................................................................. 48
9.2.1 Professional Allowance...................................................................... 49
9.2.1.1 Professional Allowance for Medical........................................ 49
9.2.1.2 Professional Allowances for Teaching...................................... 49
9.2.1.3 Scarcity Allowance for Mathematics and Physics Teachers...... 50
9.2.1.4 Professional Allowance for Royal Audit Authority.................... 50
9.2.1.5 Professional Allowances for Anti-Corruption Commission....... 51
9.2.1.6 Professional Allowance for
Department of Civil Aviation (DCA)....................................... 51
9.2.2 House Rent Allowances for Civil and Public Servants........................ 51
9.2.3 House Rent Allowance for other Civil and Public Servants................. 53
9.2.4 Officiating Allowance........................................................................ 54
9.3
Discretionary Grants................................................................................... 54
9.4
Foreign Service Entitlements....................................................................... 54
9.5
Travelling Allowance................................................................................... 55
9.5.1 Daily Allowance (DA) – In-country.................................................... 56
9.5.2 Daily Subsistence Allowance (DSA) in India...................................... 58
9.5.3 Daily Subsistence Allowance (DSA) for
Countries Other Than India (COTI)................................................... 59
9.5.4 Travel Allowance (TA)........................................................................ 60
9.5.5 Porter and Pony Charges.................................................................... 60
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9.5.6 TA/DA of Local Community Leaders.................................................. 61
9.5.7 Carriage charge of personal effect...................................................... 62
9.6
Tax Free Vehicle Quota for Public Servants................................................. 62
9.7
Non-Monetary Benefits (NMBs).................................................................. 66
10 GOVERNMENT POOL VEHICLE.......................................................................... 68
11 Post service benefits..................................................................................... 72
11.1 Public Service Pension Benefit......................................................... 72
11.1.1 Introduction................................................................................... 72
11.1.2 Pension benefit payout and benefit level......................................... 72
11.1.3 Impact of pay consolidation or pay revision................................... 73
11.1.4 Cost of pay revision on the sustainability........................................ 73
11.2 Measures to Enhance the Sustainability of Pension Plan............................. 74
11.2.1 Reconsideration of Pension Formula based
on 24 months average salary............................................................. 74
11.2.3 Suspension of pension on re-employment...................................... 75
11.2.4 National voluntary savings scheme................................................. 75
11.2.5 Home Ownership Program for the members.................................. 75
11.3 Gratuity....................................................................................................... 76
11.4 Early Retirement Scheme (ERS)................................................................... 76
11.5 Special Retirement Scheme (SRS)............................................................... 77
11.6 Group Insurance Scheme (GIS)................................................................... 77
12 Implication on corporate and other sectors.................................... 79
12.1 Background .............................................................................................. 79
12.2 SOEs under Ministry of Finance (MoF)....................................................... 79
12.3 Druk Holding & Investments (DHI)............................................................ 79
12.4 DHI Owned Companies (DOCs)................................................................. 80
12.5 Spiraling Effect of Public Service Salary Revision on Corporate Sector...... 80
12.5.1 Effect on SOEs under MoF.............................................................. 80
12.5.2 Effect on DHI and DOCs................................................................ 81
12.6 Royal Monetary Authority of Bhutan (RMA)............................................... 81
iv
12.7 Financial overview of the Corporate Sector................................................ 81
12.8 Private Sector.............................................................................................. 82
13 Impact of Salary Revision........................................................................... 84
13.1 Annual Financial Implication...................................................................... 84
13.2 Financing Pay and Allowance Revision........................................................ 85
13.3 Fiscal Projection after Revisions.................................................................. 86
13.3.1 Domestic revenue.......................................................................... 87
13.3.2Current Expenditure.......................................................................... 87
13.3.3 Public debt..................................................................................... 87
13.3.4 Inflation ...................................................................................... 88
13.3.5 Other Fiscal & Economic Projections............................................. 88
14 IMPLEMENTATION OF NEW PAY STRUCTURE................................................... 89
15 General Recommendations........................................................................ 90
15.1 Recommended Fiscal Measures................................................................... 90
15.1.1 Revenue Enhancement Measures................................................... 90
15.1.2 Measures on Expenditure Rationalization....................................... 90
15.2 Cost of Living Adjustment (COLA).............................................................. 91
15.3 Performance Based Incentives.................................................................... 92
15.4 Independence of Constitutional Bodies from RCSC.................................... 92
15.5 Other General Recommendations............................................................... 92
16 ACKNOWLEDGEMENT ...................................................................................... 94
17 ANNEXURES
...................................................................................... 95
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The Second Pay Commission
1
1 EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
The Second Pay Commission was established under a Government Executive Order No.
C-2/9/153 dated 13th November 2013. As per Section 2, Article 30 of the Constitution
of Bhutan, the Pay Commission is to recommend “revisions in the structure of the salary,
allowances, benefits, and other emoluments of the Royal Civil Service, the Judiciary, the
members of Parliament and Local Governments, the holders and members of constitutional
offices and all other public servants with due regard to the economy of the Kingdom and other
provisions of this Constitution”.
While it was not possible to cover each and every organization, the Second Pay Commission
consulted as many agencies as possible for their views and suggestions on the revision of
pay and allowances. A website (www.secondpaycommission.gov.bt) was established to seek
public views on the revision of salary, allowances, pool vehicles and vehicle quota system
amongst others through forum discussions and emails. The Commission further received a
number of unsolicited suggestions and representations.
The Commission began its work by taking a close look at the financial affordability and the
implications that a pay revision could have on the overall economy of the country; especially
considering the recent economic slowdown, the shortage in the availability of Indian Rupees
in the market, and likely delays in the completion of some of the mega hydropower projects
affecting projected domestic revenues. In this regard, the Commission was mainly guided by
the provision in the Constitution that “the Government shall ensure that the cost of recurrent
expenditures is met from internal resources of the country”. The Commission considered a
number of cost cutting measures and expenditure rationalization including the overarching
need to contain the growth in the size of the civil service to within manageable limits into the
foreseeable future.
Through extensive rationalization of both domestic revenues and current expenditures as
projected in the 11th FYP, sufficient fiscal space was created for a pay revision to cover at
least the income erosion since the last salary revision, which was in the form of a lumpsum
salary allowance that became effective January 2011. Apart from ensuring that all current
expenditures are met through domestic revenues, the recommendations of the Commission
are in keeping with the 11th FYP target of meeting at least 85 percent of all current and capital
expenditures from domestic revenues by the end of the Plan period.
Some of the main recommendations of the Commission are as follows:
Pay:
i.
The salary and other benefits of the Civil Service, the Judiciary, the Members of the
Parliament and Local Governments, the Holders and Members of Constitutional
Offices and all other Public Servants are revised to protect against income erosion
as measured in the CPI since 2011. A minimum of a 20 percent revision in salary
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from the 2011 salary levels is therefore recommended.
ii.
The pay scales of some of the key positions such as the Prime Minister, Speaker
of the National Assembly, Chief Justice of Bhutan, Ministers and Constitutional
Post Holders are restructured from the 2011 salary levels.
iii.
For categories of public servants that did not receive the lumpsum salary
allowances in 2011, the provisioning for the lumpsum salary allowance at rates
consistent with the 2011 percentages is also recommended.
Allowances:
Salary Based Allowances:
i.
To continue with the existing allowances since the earlier consideration based
mainly on scarcity has not changed, but to convert them to lumpsum allowances
at the 2011 salary levels.
ii.
To continue with discretionary grants but make such grants taxable as with all
such incomes and to ensure transparency in the use of the grants.
iii.
To make allowances of teachers and lecturers with Masters and PhD degrees at
par with Doctors in the medical profession.
iv.
To introduce allowances at par with the RAA for the internal auditors of various
agencies.
v.
To introduce lumpsum allowances of 25-45 percent of 2011 salary levels
specifically for the Airworthiness and Flight Operations Officers of the Department
of Civil Aviation.
vi.
To rationalize difficulty allowances to encourage public servants to take up rural
postings.
House Rent Allowance:
i.
The consolidated salary structure introduced in 1988 incorporated all previous
allowance including housing allowance. Since then purchasing power is being
restored to the year of each pay revision. It is recommended not to introduce
house rent benefits for any new categories of the civil and public services.
ii.
At the national level, the average expenditure on housing constitutes 20 percent
of the salaries of civil and public servants as per the assessment of the National
Statistics Bureau. Affordable housing is a major challenge, particularly for the low
income groups and in places like Thimphu and Phuentsholing. It is recommended
that the government urgently invest in NHDC, NPPF and other relevant agencies
to increase the stock of low income housing wherever required.
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iii.
For those public servants who are presently entitled to the housing allowances
under various Acts and rules and regulations, it is recommended to apply a
uniform house rent allowance of 20 percent of basic pay. Where government
housing is provided, this allowance will not apply.
Travel Allowance:
i.
Civil and public servants should not have to face undue hardships while traveling
on duty. It is recommended to appropriately revise all allowances related to travel
(in-country and ex-country). At the same time, it is recommended that expenditures
on travel must be controlled and overall travel budget for the government be kept
within a maximum ceiling of 15 percent of the budget for pay and allowances. The
overall expenditure on travel due to enhanced travel allowances is not expected
to be an additional burden to the exchequer with the budget ceilings and control
mechanisms.
ii.
Existing rules on exceptions to the TA/DA rates should be withdrawn immediately.
iii.
The “dholam” and porter pony systems for in-country travel needs immediate
rationalization.
Benefits:
Post Retirement Benefits:
i.
For the sustainability of the Pension Fund, which is guaranteed by the government,
it is recommended that the basis for pension calculation be “the average of the
basic pay for the last 24 months” and not as stipulated now as the “last pay”.
ii.
Pension payment should be suspended for those public servants on being appointed
and/or elected to any posts for which remunerations are paid through public funds.
iii.
It is recommended that one ceiling for gratuity be applicable for all public servants,
the vesting period be removed, and the maximum ceiling be enhanced to Nu. 1.5
million.
Government Pool Vehicles:
i.
It is recommended that, henceforth, designated pool vehicles be provided only
to the Prime Minister, Cabinet Ministers, Chief Justice of Bhutan, Speaker of the
National Assembly, Chairperson of the National Council, Leader of the Opposition,
and Dzongdags.
ii.
For others that are presently entitled to designated vehicles as per relevant Acts and
rules and regulations, a similar arrangement as provided for the Members
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iii.
iv.
of Parliament (a one-time Nu 700,000 grant towards purchase of vehicle on
appointment and monthly allowances for driver and maintenance) is recommended.
It is recommended that the government do away with the Pool Vehicle system
in its entirety and create a corporate entity to manage these pool vehicles. The
corporate entity thus created should rent and provide the transportation services at
a fee to government agencies requiring such services. This could be immediately
implemented for Thimphu and then rolled out to the rest of the country.
Vehicle Quota System
i.
A civil servant on reaching a certain grade in the system is eligible for vehicle
quota every seven years for which there are certain exemptions of taxes for
import of the vehicle. It is recommended that the vehicle quota be monetized
through payment of Nu. 160,000 whenever the quota becomes due. This will
also be applicable to other public officials who are entitled to vehicle quota.
ii.
Public servants who are provided designated pool vehicles by virtue of their
positions and responsibilities will neither be entitled to the vehicle quota nor the
one-time grant of Nu. 700,000 towards purchase of vehicle and the driver and
maintenance allowances.
iii.
Unused vehicle quotas of the public servants shall be monetized at Nu. 160,000.
Foreign Services Entitlements
i.
It is recommended that a number of the foreign services entitlements like home
leave passage, furnishing and transfer of personal effects be allowed to be
monetized as it would benefit both the individuals as well as the exchequer.
ii.
It is recommended that all foreign entitlements be denominated in the local
currency so that exchange rate fluctuations do not affect the individuals.
Non-Monetary Benefits
i.
It is recommended for introducing a number of Non-Monetary Benefits to help
attract, retain and motivate public servants. The more significant recommendations
are to increase maternity and paternity leave periods, introduce leave in case of
miscarriages, and provision of space for crèches in government agencies.
Other Recommendations
i.
It is recommended that a National Saving Scheme (NSS) be introduced to
take advantage of pay revision opportunities. The NPPF and other Financial
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Institutions should implement this scheme. This is important in the current
economic scenario, as this will ensure that not all the pay revision goes towards
consumption and further promote a savings culture.
ii.
The Commission also makes a number of recommendations to enhance revenues,
and rationalize expenditures that have a direct bearing on the government’s
ability to ensure fiscal sustainability while providing high quality services by
attracting, retaining and motivating public servants.
The Commission recommends that the efforts of the government to “link pay to performance” be
expedited. These efforts should be preceded by a comprehensive Organizational Development
(OD) exercise with detailed studies and consultations so that a credible performance
management system to support the linkage could be established and implemented. While
in the interim period, pay revisions might be driven by inflation and consumer price indices,
future pay revisions and in particular real pay increases must be driven by productivity and the
economic situation of the country.
The successful implementation of the recommendations of the Second Pay Commission will
require the amendment of a number of provisions in the laws relating to pay, allowances and
service benefits: specifically those provisions in the Judicial Services Act; the Parliamentary
Entitlements Act; the Entitlement Act for Holders, Members and Commissioners of Constitutional
Offices; the Bhutan Civil Service Act; and the Labour and Employment Act and the supporting
rules and regulations. It is also recommended that the Pension Policy and Pension Bill be
passed at the earliest.
In keeping with the constitutional provisions, the recommendations of the Commission are
to be implemented on approval of the Lhengye Zhungtshog and subject to such conditions
and modifications as may be made by the Parliament. From amongst the recommendations
of the Commission, the rationalization of the “dholam” system would have to precede
the implementation of the proposed enhancements of the in-country travel and difficulty
allowances.
The recommendations of the Commission are recommended to be effective from 1st July 2014.
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2
2.1
BACKGROUND
2
BACKGROUND
Establishment of the Pay Commission
In keeping with Article 30 of the Constitution of Bhutan and as approved by His Majesty the
King on the recommendation of the Lhengye Zhungtshog, the Second Pay Commission was
established through an Executive Order No. C-2/9/153 dated 13th November 2013 (Annexure
1).
2.2
Composition of Members
The Commission comprised of the following Members:
2.3
2.4
1.
Dasho Chhewang Rinzin, Managing Director, Druk Green Power Corporation
(Chairperson)
2.
Tshering Dorji, Secretary, Ministry of Home and Cultural Affairs
3.
Lam Dorji, Secretary/Nim Dorji, Joint Secretary, Ministry of Finance
4.
Karma Tshiteem, Secretary, Gross National Happiness Commission
5.
Dubthob Wangchug, Chief Executive Officer, National Pension & Provident Fund
6.
Kuenzang Dechen, Jajin Consultancy/Thinley Wangchuk Dorji, Chief Executive
Officer, Bhutan Tourism Corporation
7.
Ugyen Norbu, Chief Research Officer, National Statistics Bureau
Secretariat for the Commission from the Ministry of Finance
1.
Sonam Tenzin, Deputy Chief Planning Officer, Policy & Planning Division
2.
T.N.Sharma, Officiating Chief Budget Officer, Department of National Budget
3.
Rinzin Dorji, Sr. Planning Officer, Policy & Planning Division
4.
Tshering Dorji, Sr. Statistical Officer, Policy & Planning Division
Tenure and Terms of Reference
As per the Executive Order, the tenure of the Commission was for a period of three months,
which was subsequently extended for another month.
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The following were the Terms of Reference for the Commission:
1)
2)
To recommend revisions in the structure of the salary, allowances, benefits and
other emoluments for the following categories of employees:
i.
Civil Servants,
ii.
Judiciary,
iii.
Members of Parliament,
iv.
Local Governments,
v.
Members of Constitutional Offices, and
vi.
Other Public Servants.
The Executive Order also mandated the Commission to review and recommend
in respect of the following specific areas:
i.
Introducing housing allowance for civil servants;
ii.
Revising the salary and other benefits of local government officials;
iii.
Introducing rural posting allowance for civil servants, especially teachers;
iv.
Reviewing the foreign service entitlement rules;
v.
Reviewing the feasibility and implications of discontinuing the government
pool vehicles system and replacing it with a system of allowances;
vi.
Lifting the vehicle quota for all civil servants and alternatives thereto; and
vii.
Reviewing the recommendations of the First Parliament with regard to the
revised pay scale for the Prime Minister and Ministers.
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3
3.1
3 GUIDING PRINCIPLES
GUIDING PRINCIPLES
Objectives
The Commission considered it’s Terms of Reference and the recommendations are being made
with the following main objectives:
3.2
i.
To attract and train, and to motivate and retain the best officers within the public
service;
ii.
To promote meritocracy and excellence at all levels of the public service;
iii.
To strengthen and link pay to performance;
iv.
To promote equitable pay for similar services;
v.
To protect salary income against erosion;
vi.
To provide decent post service benefits; and above all
vii.
To strive towards a “small, compact, efficient and effective” public service.
Principles
While the basic principles of any pay revision should be to attract, retain and motivate the best
and brightest public servants, the recommendations, in keeping with the Terms of Reference,
were considered within the following broad macroeconomic parameters:
i.
Fiscal sustainability: Ensure that the proposed salary revision does not undermine
the long term fiscal sustainability and economic stability of the country, and is in
keeping with the relevant provisions of the Constitution.
ii.
Expenditure rationalization: Any upward salary revision recommended is met
largely through rationalization of expenditures such as cost cutting and other
measures.
iii.
Spiraling effect: Be mindful of the spiraling effect on the salaries of the private,
corporate and other sectors in the country that could negatively impact the
economy.
iv.
Macro-economic impact: Consider the impact of salary revision on inflation,
reserves and balance of payments.
v.
Promote a savings culture: Consider ways to inculcate a culture of savings and
investments among the public servants.
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4
METHODOLOGY
4
METHODOLOGY
In carrying out its mandate, the Commission adopted the following methods and approaches:
i.
Review of the First Pay Commission Report;
ii.
Review of relevant acts, policies, rules and regulations, guidelines, and relevant
executive orders pertaining to public servants’ salary and benefits;
iii.
Review of existing pay structures of the civil servants and their trends;
iv.
Review of pay structures and salary revisions of other countries;
v.
Analysis of the attrition rates in the public service and reasons thereof;
vi.
Review of the Consumer Price Index (CPI), specifically relating to purchasing
power of salary income;
vii.
Use of quantitative tools such as central tendency and measure of variation to
analyze the salary in terms of its levels and distribution;
viii.
Consultations with relevant stakeholders (list of agencies that the Commission
met attached at Annexure 2); and
ix.
Wide levels of feedback through media and other means.
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5
5 CURRENTSITUATION
ECONOMIC SITUATION
CURRENT ECONOMIC
The Commission took stock of the current macroeconomic situation of the country to assess as
to whether the Government could afford a revision in the public servants’ pay and allowances,
and if so to what extent. In doing so, the Commission reviewed the performances of the real,
fiscal, monetary and external sectors; particularly to see the impact of the earlier revisions in
pay and allowances on the economy.
5.1
Real Sector
In the 10th FYP period, the economy grew steadily at an average of 7.4 percent, largely driven
by the accelerated development of the hydropower sector. The growth increased from 5.7
percent in FY 2008-09 to 9.3 percent in FY 2009-10 to 10.1 percent in FY 2010-11. The
public servants’ salary revision in 2009 (35 percent revision) contributed mainly to growth
in the service sector, which grew by 23.6 percent and constituted about 12 percent of GDP.
Similarly, in FY 2010-11 the social and general government grew by 16.9 percent and share
to GDP increased to 13 percent when public servants were given lumpsum salary allowance
in 2011. The growth however decelerated to 6.5 percent in FY 2011-12 and in FY 2012-13 to
5.2 percent, mainly due to measures initiated to correct the imbalances in the external sector.
Figure5.1:Gross Domestic Product (GDP)
In terms of GDP share in the 10th FYP, the industry sector dominated with an average share
of 41 percent followed by service sector with 37 percent and agriculture sector with 17
percent. The impressive growth in industry sector was propelled by the ongoing construction
of a number of large hydropower projects. The persistent low growth in agriculture sector is
indicative of the limited scope in expansion of the sector although substantial resources are
being endowed to the sector.
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5.1.1
Investment
During the 10th FYP, on an average, investments grew annually by 19.5 percent. Domestic
capital formation however declined during the last two fiscal years of 10th FYP, as there were
no new investments in the hydropower sector and also due to the winding up of the 10th FYP
activities.
During the same period, while Government investments grew steadily, private sector
investments actually declined mainly on account of the restrictions on loans for real estate
development.
Figure 5.2: Investment
5.1.2
Consumption
Total consumption increased from Nu. 39.2 billion in FY 2008-09 to Nu. 64.6 billion at
the end of 10th FYP largely driven by private consumption. Private consumption constituted
about 65 percent of the total consumption while the government consumption constituted the
balance 35 percent. During FY 2008-09 and FY 2010-11, government consumption witnessed
higher growths due to salary revisions. The share of consumption to GDP is 65 percent, which
is higher than the share of investment.
Figure 5.3: Consumption
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The consumption expenditures varied directly with change in disposal incomes. The average
propensity to consume (APC) decreased as income increased reflecting that the rate of increase
in consumption was less than the rate of increase in income. At certain point in time, the
average propensity to consume decreased with rise in income, and the marginal propensity
to consume (MPC) although positive was less than one. The mean APC for the 10th FYP was
0.65 indicating that about two third of the income was consumed reflecting a low national
savings rate.
Table 5.1: Income and Consumption
Year
2008/09
2009/10
2010/11
2011/12
2012/13
5.1.3
Gross Disposable Income
Consumption
(Nu. in millions)
61,371
67,708
78,382
92,569
103,989
(Nu. in millions)
39,157
45,784
51,661
59,414
64,607
APC
MPC
0.64
0.68
0.66
0.64
0.62
0.57
1.05
0.55
0.55
0.45
Consumer Price Index (CPI)
The Consumer Price Index (CPI) for Bhutan is based on the movement of prices in the 20
Dzongkhags and the two major Thromdes of Thimphu and Phuentsholing with a total 557
sample outlets, and using 2003 as the base year. The CPI increased to 180.5 by 2012, of which
food items (weight: 31.67) index increased to 206.9 and non-food items (weight: 68.33) index
increased to 168.2.In 2013, the index was reset based on the Bhutan Living Standard Survey
(BLSS) of 2012. The CPI index for food increased to 115.49 and non-food index rose to 109.44
by the end of 2013. The highest inflation at 10.9 percent was recorded in 2012 mainly due to
the high inflation in food items that hovered at around 14 percent while for non-food items;
the inflation was at around 9.3 percent. The average inflation for the period 2008-2013 was
8.02 percent.
Table 5.2: Inflation
Year Average
2008
2009
2010
2011
2012
2013
Food
11.89
9.03
8.85
10.19
13.95
8.63
Non-food
6.62
2.12
6.11
8.14
9.26
8.49
4.41
7.02
8.86
10.93
8.58
8.30
Overall
Source: National Statistics Bureau (NSB)
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5.1.4
Household Consumption Expenditure
According to the Bhutan Living Standard Survey 2012, the mean monthly household
consumption expenditure was Nu. 18,367, of which 38.9 percent accounted for food
expenditures and 61.1 percent was for non-food expenditures. Within food items, the top
four expenditure shares were for dairy products at about 20.4 percent, followed by rice (14.7
percent), vegetables (14.2 percent), and other cereals and pulses at 10.3 percent. Of the 61.1
percent for non-food expenditures, house rent accounted for 19.2 percent, transport and
communication (18.1 percent), and clothing and footwear at 12.4 percent.
Bumthang, Chhukha, Gasa, Haa, Paro, Punakha, Thimphu and Wangdue Phodrang had
monthly mean household consumption expenditures that were above the national average of
Nu. 18,367. Some 60 percent of the civil and public servants are posted in these Dzongkhags.
The highest monthly mean household consumption expenditure was reported in Gasa at Nu.
35,650 and lowest was in Dagana at Nu. 11,381.
Figure 5.4: Monthly household consumption expenditure
Source: BLSS, 2012
5.1.5
Housing
As per BLSS 2012, less than two thirds of the households (60 percent) in the country own
their own dwellings. Of this, only about 16.6 percent of the urban households own their own
dwellings. In contrast, 83 percent of the rural households live in their own dwellings. Pema
Gatshel has 91 percent of the households owning their own homes, while the figure is only 19
percent for Thimphu. Other Dzongkhags like Chhukha (43 percent), Sarpang (52 percent) and
Paro (58 percent) are amongst those with dwellings ownership below the national average.
Private individuals are the largest provider of urban housing stock comprising of nearly 43
percent, followed by the government at 14 percent, and the public corporations at 4 percent.
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Figure 5.5: Distribution of households by tenure status, housing provider and area (in percent)
Under non-food items, housing has a weightage of 18.8 percent and the average annual
inflation under the housing component during 2008-2013 was recorded at 6.2 percent. As
per the BLSS 2012 survey, the national mean monthly house rent was Nu. 3,313. The survey
covered 63 towns for assessment of the monthly house rents.
Figure 5.6: Mean Monthly Rent (national average Nu. 3,313)
Source: NSB
The highest average rent of Nu. 9,296 was reported at Rurichhu under Wangdue Phodrang
with the lowest average rent of Nu. 474 per month reported at Kheri Gonpa under Pema
Gatshel. Civil servants in Thimphu, Punakha and Wangdue Phodrang (52 percent of the civil
servants) are exposed to house rents above the monthly mean national house rent of Nu.
3,313.
The BLSS 2012 also reported on rents in various locations within the urban area of Thimphu.
14 of 115
The highest rent was reported in Upper Motithang followed by the core town and Lungtenphu
areas, while lowest rents were reported in the Changjiji, Dechencholing and Taba areas. The
mean monthly rent in Thimphu is Nu. 5,014, which is 52.2 percent higher than the national
mean monthly rent.
Figure 5.7: Thimphu Monthly Rent (mean rent: Nu. 5,051)
In urban Phuntsholing, the mean monthly house rent as per BLSS 2012 was Nu. 4,207, which
is 17.7 percent higher than the monthly national mean. The highest rent was reported in the
Vegetable Market area with a mean monthly rent of Nu. 5,880 while the lowest mean monthly
rent of Nu. 1,889 was reported at Kharbandi.
Figure 5.8: Phuntsholing Monthly Rent (mean rent: Nu. 4,027)
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Since the salary revision in 2011, the rental inflation over the two years period was 14.8
percent. Assuming that the same level of inflation to continues, the rental inflation is expected
to touch 22.2 percent by June 2014.
Figure 5.9: National Rent Inflation
The weighted mean salary of the civil servant is Nu. 16,167, which corresponds to the salary at
P5 level. The monthly average rent of Nu. 3,313 as per the BLSS 2012 survey thus constitutes
20 percent as a percentage of the P5 level salary.
5.2
Fiscal Sector
With prudent fiscal management, deficit was contained to at an average of 0.1 percent of GDP
during the 10th FYP. During the initial two years of the plan period there was fiscal surplus of
1.9 percent and 1.6 percent of GDP respectively. In FY 2010-11, the deficit was 2.1 percent
and for the remaining period of the 10th FYP, the deficit was about 1 percent of GDP.
The revenue deficit1 increased from 11.8 percent of GDP in FY 2008-09 to 17.3 percent
of GDP by the end of the 10th FYP. While domestic revenues adequately covered current
expenditures, the average revenue deficit during the 10th FYP stood at 15 percent of GDP.
Figure 5.10: Fiscal Position
1. Domestic revenue less total expenditure
16 of 115
5.2.1
Domestic Revenue
Tax revenues contributed to a major component of domestic revenues constituting about 14
percent of GDP and out-performed non-tax revenues. On an average, tax revenues increased
by 25 percent while non-tax revenue witnessed a negative 4 percent growth. The decrease
in non-tax revenues was mainly on account of the corporatization of the Tala project. Prior
to corporatization, the Tala project transferred its earnings as non-tax revenues prior to
the government. The decline in transfers from RMA and the closure of Bhutan Lottery also
contributed to the lower growth in non-tax revenues.
Figure 5.11: Revenue Trend
The combined effects on the non-tax revenues through temporary spikes in profit transfers, the
upturn in interest payments and the steady downward trend in dividends declared by the SOEs
resulted in a decline in the share of non-tax ratio to GDP. Nevertheless, both the direct and
indirect tax ratios to GDP increased in the 10th FYP. The changes in the direct tax ratios were
dominated by CIT. The upward trends in the PIT and BIT and the relatively stable path of the
“other” direct tax ratio also contributed to the steady growth in the overall direct tax revenues.
The increase in PIT was partially from salary revisions with the number of salaried income
tax payers increasing by 30 percent in FY 2009-10 and by 14 percent in FY 2011-12. The PIT
revenue grew by 46.3 percent in FY 2009-10 and 31.3 percent in FY 2011-12.
Figure 5.12: Trends in Direct and Indirect Tax Ratios to GDP (%)
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5.2.2
Expenditure
The capital expenditure increased annually by 16.3 percent and current expenditure by 13.9
percent during the 10th FYP. With growth in the number of public servants and increases in
their remunerations, the share of pay and allowances to current expenditure increased to 43
percent in 10th FYP as against 40 percent in 9th FYP. During the salary revisions in FY 2009-10
and FY 2010-11, pay and allowances constituted 45 percent of the current expenditures.
Figure 5.13: Expenditure Trend
During the 10th FYP, domestic revenues covered all current expenditures and financed 20.4
percent of capital expenditures.
Figure 5.14: Coverage of expenditure by domestic revenue
5.2.3
Public Debt
The total public debt increased from Nu. 40.58 billion in FY 2008-09 to Nu. 98.74 billion by
the end of 10th FYP. Hydropower debt accounted for Nu. 54.51 billion.
On an average, interest payments constituted 13.3 percent of the current expenditure. Debt
service ratio increased from 13.6 percent in FY 2008-09 to 17.2 percent in FY 2012-13.
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Figure 5.15: Public Debt
Source: Ministry of Finance
5.3
5.3.1
Monetary Sector
Money Supply and Credit
There was an increase of 24.6 percent in broad money (M2) in FY 2008-09 compared to 2.3
percent in the previous year. The increase was attributed to growth in net foreign assets by
about 25 percent. M2 increased significantly in the first three years of the 10th FYP due to the
significant growth in private sector credit, but experienced negative growth in 2012 due to a
number of monetary interventions.
On an average, the total domestic credit during the 10th FYP increased by 32 percent, largely
driven by the rapid expansion of private sector credit. In terms of GDP, the total domestic
credit was about 41 percent, which is almost entirely credited to the private sector.
Table 5.3: Money Supply
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
% change
Broad Money, M2
2.3
24.6
30.1
21.2
(1.0)
18.6
Total Domestic Credit
32.8
21.7
42.3
32.7
51.3
12.8
Claims on Government
17.8
86.7
(5.0)
32.1
(131.5)
166.7
Private sector credit
35.8
28.9
40.7
29.4
30.1
7.1
Domestic credit as % of GDP
Broad Money, M2
55.40
62.49
64.07
54.93
58.20
Total Domestic Credit
28.05
34.60
38.85
50.92
51.33
Claims on Government
-5.43
-4.48
-5.00
1.37
3.25
31.86
38.88
42.54
47.93
45.84
Private sector credit
Source: RMA
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In terms of credit share by sector, construction sector accounted for 26 percent followed by
manufacturing (17 percent) and personal (16 percent). Although there was rapid domestic
credit expansion during the 10th FYP, there was minimal benefit to the agriculture and transport
& communication sectors in terms of access to credit.
Table 5.4: Credit by sectors
2008/09
2009/10
2010/11
2011/12
2012/13
(percent of total credit)
Agriculture
2.71
1.65
1.62
2.18
2.67
Service & Tourism
13.10
14.62
12.03
12.01
11.74
Manufacturing
19.38
17.08
17.45
15.26
17.91
Building & Construction
25.03
25.58
25.31
26.47
26.25
Trade & Commerce
17.44
15.99
14.29
8.31
11.89
Transport & Communication
6.25
7.72
9.95
9.52
6.59
Personal Loans
13.88
15.29
16.03
16.25
17.64
Loan Against Shares
0.61
0.68
0.63
1.02
0.98
Government (Short term
loans)
0.00
0.00
0.00
0.00
2.39
Credit Card
0.00
0.00
0.02
0.01
0.01
Others*
Source: RMA
1.58
1.39
2.68
8.99
1.93
5.3.2
Interest Rates
The lending rates ranged between 9 to 16 percent while deposit rates ranged between 4.5 to 8
percent during the 10th FYP with a spread of about 8.5 percent. Since interest rates on deposits
were significantly lower than the average annual inflation, this could have dis-incentivized
savings.
Table 5.5: Lending rates
Years
Average Lending
Rate
Average Deposit
Rate
Source: RMA
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
(9-16)
(9-16)
(9-16)
(9-16)
(9.75-16)
(10-16)
(4.5-7)
(4.5-7)
(4.5-7)
(4.5-8)
(4.5-8)
(4.5-8)
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5.4
External Sector
The current account deficit deteriorated as a result of widening trade deficit with imports
increasing by 17 percent annually against annual increases in exports of only 5 percent during
the 10th FYP period leading to further aggravation in the shortage of Indian Rupees in the
economy. Capital inflows in the form of loans and grants helped to maintain positive overall
balance of payments.
Figure 5.16: Balance of Payments
Source: RMA
The current account deficit in terms of GDP deteriorated from 1.1 percent in FY 2008-09
to 17.1 percent of GDP at the end of the 10th FYP. During the same period, the trade deficit
increased from 7.5 percent of GDP to 25.1 percent of GDP.
Although there is a shortage of Indian Rupee in the economy, the Gross Reserves increased
from US$ 704 million in FY 2008-09 to US$ 951 million by the end of the 10th FYP. The
accumulation of the reserves was largely on account of the loans and grants received from
the development partners over the years. However, the gross reserves as “month of imports”
decreased from 12.4 months in FY 2008-09 to 9.8 months in FY 2012-13.
Figure 5.17: Gross International Reserves
Source: RMA
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5.5
Impact of Current Economic Situation on Real Income
The impact of the revisions of public servants’ pay and allowances during the 10th FYP on the
economy were not very significant as the revisions were implemented in a phased manner
with the overall increase aggregating to 55 percent on the 2006 Pay Scale (a 35 percent pay
revision in January 2009 and a lumpsum salary allowance in January 2011).
During the 10th FYP, food items contributed to 46 percent of inflation and non-food items
contributed to the balance 54 percent. During the same period, rental inflation was 29 percent.
The 2 percent annual salary increment has not been able to safeguard the inflation induced
income erosion. While the salary income of the public servants eroded by 44 percent in the
last five years (2008-2012), the real income erosion since the implementation of the lumpsum
salary allowance in 2011 till June 2014 is estimated at 20.1 percent.
An upward revision of pay and allowances is therefore necessary and recommended to make
up for this erosion in income.
Figure 5.18: Income Erosion
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6
fiscal space
6
fiscal space
Bhutan is faced with major economic challenges at the present juncture with the government
putting in place a number of monetary and fiscal measures to improve the situation. The
Commission took a close look at the state of the economy, and at the macroeconomic impact
and fiscal sustainability that any upward revision of pay and allowances of public servants
would entail. The fiscal projections for the 11th FYP and the underlying assumptions were
scrutinized so as to ensure that the recommendations of the Commission are prudent and did
not deviate from the sustainable fiscal path besides ensuring the constitutional requirement for
recurrent expenditure to be covered by domestic revenues. The Commission also considered
the fiscal policy target of covering at least 15 percent of capital expenditure in the budget
report of FY 2013-14 as well as the 11th FYP’s target of 85 percent of total expenditure
coverage by domestic revenues as the overriding parameters for assessing the fiscal space and
recommending any revision of pay and allowances.
6.1
11th FYP Projection
As per the 11th FYP Document, the total resources (revenue & grants) outlay was projected at
Nu. 209.328 billion against the total expenditure outlay of Nu. 224.165 billion. The resources
included domestic revenue of Nu. 150.689 billion and grants of Nu. 58.639 billion. On
the expenditure front, Nu. 132.165 billion was projected for recurrent expenditure and Nu.
92.000 billion for capital expenditure. The projected fiscal deficit was Nu. 112.150 million
(0.2 percent of GDP) after adjusting for net lending.
The 11th FYP outlay included provisions for revision in pay and allowances. The provision
for salary revision in the 11th FYP has been adjusted within the plan outlay. The provision for
salary consolidation amounting to Nu. 5.119 billion has been considered as available fiscal
space for revision in pay and allowances.
6.2
Medium Term Fiscal Framework (MTFF) as of December 2013
Since the MTFF is a public finance projection updated quarterly by the Macroeconomic
Framework Coordination Committee (MFCC), the Commission used the December 2013
MTFF as the basis for assessing the fiscal space.
23 of 115
Table 6.1: Baseline Fiscal projection: MTFF, December 2013 (Nu. in millions)
2013/14 2014/15 2015/16 2016/17 2017/18
11th FYP
Budget
Proj.
Proj.
Proj.
Proj.
Revenue & Grants
30,238
38,235
40,544
42,690
55,719 207,426
Domestic Revenue
22,391
24,599
26,185
28,828
41,093 143,096
Tax
15,866
18,151
19,758
22,144
26,771 102,690
Non-tax
6,525
6,448
6,427
6,684
14,322
40,406
Grants
7,835
13,636
14,359
13,862
14,625
64,317
Outlay
35,528
39,137
42,705
46,300
47,382 211,051
Total Expenditure
37,426
41,077
44,786
48,314
49,475 221,078
Current
19,211
23,311
24,658
29,708
32,190 129,078
Capital
18,215
17,766
20,128
18,606
17,285
92,000
Net lending (NL)
-1,898
-1,939
-2,081
-2,015
-2,093
-10,026
Fiscal Balance
-5,290
-902
-2,161
-3,609
8,337
-3,626
Net Borrowings
-92
3,459
-331
39
2
3,078
Borrowings
2,667
6,364
2,916
3,027
3,167
18,141
Repayments
2,758
2,905
3,247
2,988
3,165
15,063
Resource Gap
-5,381
2,557
-2,492
-3,570
8,339
-548
In percent of GDP
Revenue & Grants
25.5
28.9
27.7
26.3
26.2
26.9
Domestic Revenue (DR)
18.9
18.6
17.9
17.7
19.3
18.5
Grants
6.6
10.3
9.8
8.5
6.9
8.4
Outlay
30.0
29.6
29.2
28.5
22.3
27.9
Total Expenditure
31.6
31.1
30.6
29.7
23.3
29.3
Current
16.2
17.6
16.9
18.3
15.1
16.8
Capital
15.4
13.4
13.8
11.5
8.1
12.4
Fiscal Balance
-4.5
-0.7
-1.5
-2.2
3.9
-1.0
Resource Gap
-4.5
1.9
-1.7
-2.2
3.9
-0.5
Coverage by DR
Current Expenditure by DR 117%
106%
106%
97%
128%
111%
Capital Expenditure by DR
17%
7%
8%
-5%
52%
16%
Total Expenditure by DR
60%
60%
58%
60%
83%
64%
Source: MFCC
24 of 115
6.3
Expenditure Rationalization
As part of expenditure rationalization, the Commission capped the provision for the civil
service growth at 2 percent and the provision for in-country travel budget at 15 percent of
wage bill. By capping the growth in the civil service to 2 percent, there was an annual savings
of Nu. 189 million, while a capping on the in-country travel budget provided for a further
annual savings of Nu. 108 million.
With the recommendation to withdraw pool vehicles, the annual recurrent cost of pool vehicles
amounting to Nu. 409 million could be saved. There might be some increase in expenditures
as a consequence of the need to hire vehicles for conveyance for which rationalization of
travel requirements and a capping of the travel budget is recommended.
In view of the increasing cost of salary based allowances like the professional allowances,
the Commission converted these allowances that were on percentage basis to lumpsum
basis, which would result in a saving of Nu. 151 million over the four years period under
consideration.
Overall, the Commission projected expenditures savings of Nu. 2.973 billion during the 11th
FYP.
Table 6.2: Expenditure Rationalization
Sl. No Descriptions
1
2
3
4
6.4
Expenditure Savings
Containing Civil Servant
Growth at 2% p.a.
Capping in-country
travel at 15% of the
Wage Bill
Savings from Pool Vehicle Recurrent Cost
Converting Salary based
allowance to lumpsum
allowance
2014/15
Proj.
700
2015/16
Proj.
728
2016/17
Proj.
757
2017/18
Proj.
787
184
187
191
195
757
107
107
107
107
428
409
409
409
409
1,638
0
25
50
76
151
11th FYP
2,973
Revenue Enhancement
While assessing the fiscal projections, the Commission noted that the commissioning of
the Punatsangchhu-I project will be deferred from FY 2016-17 to FY 2018-19. As a result,
the domestic revenue projections were revised downwards. The revision in the Chhukha
hydropower that was agreed to in February 2014, with an estimated additional revenue of Nu.
1.970 billion, helped in enhancing the fiscal space.
The Commission also explored other possibilities to enhance the domestic revenue. With the
25 of 115
recommendation to monetize the duty free vehicle quota, an additional revenue of Nu. 665
million is estimated to be realized during the 11th FYP period. The proposed upward revision
in salary and allowances of the public servants will also translate into increase in PIT revenues
of about Nu. 313 million.
Overall, the Commission projected additional revenues of Nu. 2.948 bill in the 11th FYP
period.
Table 6.3: Revenue enhancement
Sl.
No
Sources
Additional Revenue
2014/15
2015/16
2016/17
2017/18
Proj.
Proj.
Proj.
Proj.
11th
FYP
1,282
554
555
557
2,948
1
Chhukha Power Tariff Revision
830
380
380
380
1,970
2
Additional PIT revenue from
salary revision
76
78
79
81
313
3
Tax Revenue from Vehicle
Quota
376
96
96
96
665
With the expenditure rationalization of Nu. 2.973 billion, the revenue enhancement measures
of Nu. 2.948 billion, and provisioning for salary consolidation of Nu. 5.119 billion, a fiscal
space of Nu. 11.040 billion was created in the 11th FYP outlay.
Table 6.4: Fiscal Space
Fiscal Space
2014/15
2015/16
2016/17
2017/18
Proj.
Proj.
Proj.
Proj.
3,261
2,561
2,591
2,623
26 of 115
11th FYP
11,040
7 growth
trends:
public
service
7growth
trends:
civilcivil
andand
public
service
7.1
Civil Service
Ever since Bhutan embarked on its development plans in the early 1960s and with rapid socioeconomic growth, the need for competent manpower in the government increased rapidly.
To administer the civil servants, the Royal Civil Service Commission was established in 1982
with accountability, honesty, impartiality, integrity, loyalty, professionalism, and leadership
as the core values of the civil service in its commitment to the “Tsa Wa Sum”. Overtime,
the increases in the number of the employees in the civil service and other public services
has outpaced the growth rate in population; as a result of which the ratio of public servants
to population has kept on increasing. Bhutan today has one of the highest civil servants to
population ratios in the region.
A direct consequence of such a fast burgeoning public service is the heavy burden on the
exchequer in terms of pay, allowances and benefits, both while in service and also post
retirement. Any small consideration of increases in pay and allowances has huge financial
implications due to the sheer numbers of the civil and public services.
It will be most important for Bhutan’s future fiscal sustainability and in the efficient delivery
of services that the Government ensures that the widely touted policy of a “small, compact,
efficient and effective” civil service is implemented rigorously. This will be the single most
daunting challenge not only in rationalizing the growth in the civil service, but also to link
pay and allowances to performance and to affordability. A key assumption underpinning the
recommendations of the Commission is that the annual growth in the civil service going
forward must be contained to within 2 percent; diverging from the experience of 5 percent
growth over the last so many years and the provision of 4 percent growth in the civil service
that has been provided for in the 11th FYP projections.
In the long term, the civil service would need to consider implementing the policy of “zero
growth” and downsizing with the corporate and private sectors filling in the gaps.
Figure 7.1: Civil Service growth
Source: RCSC
27 of 115
During the 10th FYP, the civil service grew at an annual average of 5 percent. The total number
of civil servants (EX/ES1-O4) as on June 2013 is 24,856. About 33 percent of civil servants
are based in Thimphu, 65.5 percent are outside Thimphu in the Dzongkhags, and 0.5 percent
are abroad mostly in the Missions and Embassies. In terms of positions, more than half of the
civil servants are in the professional and management (P1-P5) followed by 39.5 percent in the
supervisory and support position (S1-S5), 9 percent in the operational (O1-O4), and about 1
percent in Executive and Specialist position.
Figure 7.2: Civil Servants by Position Category (as on June 2013)
By age group, 50 percent of the civil servants are in the age group between 25-34 years, 21
percent between 35-44 years, 11 percent between 45-54 years, about 9 percent between
18-24 years and the remaining 2 percent are aged above 55 years. The majority of the civil
servants in professional and management group are in between the ages of 25 and 44 years.
From 2008 to June 2013, some 8,889 civil servants were recruited at an annual average
of 1,617. The maximum recruitments were into the professional and management positions
(3,759) followed by supervisory and support (3,516) and operational (772). Of these
recruitments, a maximum number of 3,359 were inducted into the Ministry of Education and
1,175 into the Ministry of Health.
The number of employees separated from the civil service during the period was about 2,797
with highest attrition of 1,219 in 2011 mainly due to the de-linking of the Royal University of
Bhutan from the civil service. The average annual separation during the period was about 560
civil servants. Of the 265 civil servants that separated in the first half of 2013, the professional
and management group accounted for 54 percent.
While many separated on retirement, some left the civil service taking advantage of employment
opportunities in other sectors like corporate, private and international organizations, and still
others left to join politics.
28 of 115
7.2
Other Public Service
As of June 2013, there were 7,873 personnel under this category of “other public service”,
which constitutes 24 percent of total public servants. They include Members of Parliament
(72), Local Government representatives (1,704), Holders and Members or Commissioners of
Constitutional Offices (24), General Service Personnel (1,239), Elementary Service Personnel
(3,155), NFE Instructors (949), consolidated contract personnel (448), para-regular personnel
(186), RAPA (91) and others (5).
The Local Government representatives at Gewog level such as the Gups, Mangmis, Geydrungs
and Tshogpas constitutes 22 percent of “other public service”. The annual salary expenditures
on account of Gewog level local government totals Nu. 147.977 million, which constitutes
23 percent of total salary expenditure under “other public service”.
The local government machineries have proliferated with democracy and decentralized
governance. The local governance structures were largely unfunded prior to the introduction
of the democratic system. Today, the local government structures have evolved into salaried
“public service” emulating the civil service. Similar to the civil service, re-structuring of the
gewogs with delegation of powers, responsibilities and accountabilities appears to be possible
and could bring in efficiencies that could reduce the financial implications to the government.
The proliferation of thromdes and yoenla thromdes, if allowed without any rationalization
would also add to inefficiencies in the systems. While the agencies might be required, the
Commission recommends that the government consider multi-tasking of many of these
agencies after rationalizing the roles and responsibilities of each of the agencies. The public
might be better served through a smaller compact administrative system.
29 of 115
8
8
Recommendation for revision of pay and
Recommendation for
revision of pay and allowances
allowances
Bhutan is largely dependent on its civil and public services to deliver the policies and planned
activities on the ground. Since the corporate and private sectors are yet to truly become the
“engines of growth”, the civil and public services have had to bear the brunt of nation building.
For the effective and efficient delivery of services, the civil service has to continue to attract
the best human resources from the market, and for this the pay and allowances of the civil and
other public services have to remain competitive. The government also has to ensure that the
services provide good working environment to motivate the employees to stay on and serve
the nation.
While the ethos of public service entails making sacrifices, it is when the pay and allowances
are not sufficient to meet the basic requirements for themselves and their families that morale
of the civil servants get affected, and then the elements of misuse and corruption are likely
to creep in. The country has been going through unprecedented inflation levels over the last
couple of years because of the economic situation that is also affected by the economic
downturn in India and elsewhere. The real income of the civil service has been eroded by 20.1
percent since the government last approved the lumpsum salary allowances in 2011.
The Commission was primarily to consider that the civil and public services get compensated
equitably for the services rendered in keeping with the constitutional provisions for “fair and
reasonable remuneration for one’s work” and in keeping with the concept of “equal pay for
equal value of work”. However, the present economic situation restricts the fiscal space for
the Commission to consider a revision beyond attempting to take care of the erosion in real
income that has already taken place.
8.1
Salary Revision: Reference Period
The proposed salary revision of 2014 is based on the 2010 pay scale and 2011 lumpsum
salary allowance. On the 2011 gross salary2, the revision proposed is 20 percent.
The 20 percent revision is proposed to cover the 20.1 percent income erosion since the last
salary revision in 2011. The revision is recommended to become effective from 1st July 2014.
The overall pay structure for all civil and public servants is placed at Annexure 3.
8.2
Prime Minister, Cabinet Ministers and Equivalent Post Holders
Salary
The Commission reviewed the recommendations of the First Pay Commission, and the
decisions of the First Parliament and the government then, with regard to the pay scales of the
Prime Minister (PM), Cabinet Ministers and other equivalent Post Holders.
2.2011 lumpsum salary allowance merged with the 2010 pay scale.
30 of 115
The First Pay Commission had proposed salary revisions for civil servants ranging from 4077 percent progressively starting from O4 to EX/ES-1 level on the 2006 pay scales. Similar
revisions had been proposed for the PM, Cabinet Ministers and other equivalent Post Holders.
In view of the prevailing economic situation then, the Government had not considered the
salary revision as proposed by the First Pay Commission in its entirety. The Government had
instead granted a 35 percent revision for civil servants with effect from 1st January 2009, whilst
the salary of the PM, Cabinet Ministers and others were maintained at same level as the 2006
pay scale. However, the annual discretionary grants, which are not taxable, were revised
from Nu. 200,000 to Nu. 300,000 for the PM, and from Nu. 100,000 to Nu. 200,000 for the
Cabinet Ministers, Speaker of the National Assembly (NA), Chief Justice of Bhutan, Opposition
Leader (OL) and Chairperson of the National Council (NC).
Recommendation of the First Parliament
During the 6th Session of the First Parliament (November 2010), a lumpsum salary allowance
(approximately equivalent to 15 percent of the 2010 pay scales) was endorsed for the civil
servants. Although the First Parliament at its 6th Session also endorsed the pay structure as
proposed by First Pay Commission for the PM, Cabinet Ministers, Speaker of NA, Chief Justice
of Bhutan, OL, and Chairperson of NC, the implementation of the pay structure was left to the
Second Parliament to consider.
The basic pay recommended by the First Pay Commission was 131 percent higher than the
current basic pay for the PM and 67 percent higher than the present pay scales for the Cabinet
Ministers, Speaker of the NA, Chairperson of NC, OL and the Chief Justice of Bhutan.
Table 8.1: Pay Scale of PM and Cabinet Ministers recommended by the First Parliament
Position Level
Existing (2006 pay scale)
Recommendation by 1PC
%
Change
Min.
Incr.
Max.
Min.
Incr.
Max.
Prime Minister
78,000
1,560
85,800
180,000
3,600
198,000
131%
Cabinet Ministers
78,000
1,560
85,800
130,000
2,600
143,000
67%
Speaker of NA
78,000
1,560
85,800
130,000
2,600
143,000
67%
Chairperson of NC
78,000
1,560
85,800
130,000
2,600
143,000
67%
Opposition Leader
78,000
1,560
85,800
130,000
2,600
143,000
67%
Chief Justice of
the SC
78,000 1,560 85,800 130,000 2,600 143,000
67%
Recommendations of the Second Pay Commission
The world over, the salary of the PM as the Chief Executive is always higher than the Cabinet
Ministers and other public servants. In the case of Bhutan, the salary of PM is presently at par
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with the Cabinet Ministers. The salary of the PM, the Cabinet Ministers and others equivalent
post holders were not revised since 2006 with the exception of the increase in the annual
discretionary grants in 2010. For all practical purposes, the discretionary grants are to be
construed as part of “pay” or “salary”.
The National Committee on Parliamentarian Entitlements proposed restructuring of basic pay
for all MPs including the PM, Cabinet Ministers, Speaker, Chairperson of NC, OL, Deputy
Speaker and Deputy Chairperson of NC and make them all equal, with additional allowances
or remunerations for positions and responsibilities considered separately.
The pay structure of MPs including Deputy Speaker and Deputy Chairperson of NC were
revised only in 2011, and therefore the Commission recommends that the present segregation
and differentiation in pay scales be maintained for the MPs and the Deputy Speaker and the
Deputy Chairperson of NC. The Commission, however, recommends that the current pay scales
do need to differentiate the roles, responsibilities and accountabilities of the PM, the Cabinet
Ministers and other equivalent post holders commensurate with the terms and conditions of
their posts while ensuring that the gaps are maintained within reasonable parameters.
The Commission therefore recommends an upward revision of 92 percent in the pay scale
for the Prime Minister and 69 percent for the Chief Justice of Bhutan and Speaker of the
National Assembly, reflecting their roles and responsibilities as the Heads of the three
branches of the Government. An increase of 54 percent is recommended for the Cabinet
Ministers, the OL and the Chairperson of the NC.
The salary of the PM is maintained at 25 percent higher than the Cabinet Ministers, and that
of the Speaker of the NA and the Chief Justice of Bhutan is recommended at 10 percent higher
than the Cabinet Ministers.
Table 8.2: Recommendations by the Second Pay Commission
Existing
Position Level
2nd PC Recommendation
%
Change
Min.
Incr.
Max.
Min.
Incr.
Max.
Prime Minister
78,000
1,560
85,800
150,000
3,000
165,000
92%
Speaker of NA
78,000
1,560
85,800
132,000
2,640
145,200
69%
Chief Justice of the SC
78,000
1,560
85,800
132,000
2,640
145,200
69%
Cabinet Ministers
78,000
1,560
85,800
120,000
2,400
132,000
54%
Chairperson of NC
78,000
1,560
85,800
120,000
2,400
132,000
54%
Opposition Leader
78,000
1,560
85,800
120,000
2,400
132,000
54%
Allowances and Grants
The other entitlements and allowances of the Prime Minister, Cabinet Ministers and other
position holders will remain the same as per the Compendium of the Entitlements of Cabinet
32 of 115
Ministers and of Equivalent Post, 2009 except for those allowances which are specifically
addressed in the relevant Chapters below.
8.3
Members of Parliament
Salary
The salary of Members of Parliament (MPs) was fixed at Nu. 30,000 per month till December
2008. This was increased by 20 percent in January 2009. The pay scales for MPs were further
revised to Nu. 50,445-1,010-55,495 in January 2011 and made at par with the pay scales of
Government Secretaries together with lumpsum salary allowances of Nu. 5,045.
The Commission recommends a 20 percent salary revision for MPs after merging the
lumpsum salary allowance to their existing pay scales.
As per the Parliamentary Entitlement Rules, 2009, the salary of the Deputy Speaker of National
Assembly and Deputy Chairperson of National Council should be maintained at 10 percent
higher than the salary of the MPs. The present pay scale of Deputy Speaker and Deputy
Chairperson is (Nu. 63,000-1,260-69,300), which is 25 percent higher than the MPs. With the
present recommendations, the pay scale of the Deputy Speaker/Deputy Chairman becomes
14 percent higher than the MPs against the provision of 10 percent in the rules.
Table 8.3: Pay Scale of Member of Parliament
Position Level
Existing Pay Scale
Recommendation
(Pay Scale 2014)
Percent
Min.
Incr.
Max.
Min.
Incr.
Max.
Dy. Speaker of NA
63,000
1,260
69,300
75,600
1,510
83,150
20%
Dy. Chairperson of NC
63,000
1,260
69,300
75,600
1,510
83,150
20%
Members*
50,445 1,010 55,495 66,600 1,330 73,250
* 20 percent on 2011 gross salary (basic plus lumpsum salary allowance)
20%*
Allowances and Grants
The allowances and other emoluments as entitled in the Parliamentary Entitlement Act, 2008
will be maintained the same except for the salary based allowances, which will be provided
as a lumpsum. The recommendation for revision of housing allowance is provided separately
under the allowances chapter.
8.4
Holders, Members and Commissioners of Constitutional Bodies
Salary
The salary and other entitlements of the Chief Justice of Bhutan is now recommended to be at
33 of 115
par with that of the Speaker of the National Assembly and is set 10 percent above that of the
Cabinet Ministers.
The salary of the other position holders, members and commissioners of constitutional
bodies were reviewed to ensure that pay and other entitlements commensurate their roles
and responsibilities as well as the terms and conditions of their appointments; especially
considering the tenures of the positions. The Commission recognized that beyond the three
branches of the government, the constitutional bodies have an important role to play in
ensuring good governance, and thus there was a need to ensure that people appointed to
these positions are remunerated fairly.
In doing so, the Commission noted that some of the recommendations would be in conflict
with existing Acts that inadvertently included references to specific pay and allowances.
However, in line with the Constitution, the Commission felt that the recommendations of the
Pay Commissions, established from time to time, should and must have precedence over any
other existing Acts in respect of pay and allowances.
The Commission therefore recommends a 30 percent revision in the pay scales for the
Chairpersons of the RCSC and the ACC, the Chief Election Commissioner and the Auditor
General and a 25 percent revision for the Commissioners.
Table 8.4: Pay Scale of Post Holders of Constitutional Bodies
Position Level
Chairperson, RCSC
Chairperson, ACC
Existing Pay Scale
Recommendation
(Pay Scale 2014)
Percent
Min.
Incr.
Max.
Min.
Incr.
Max.
63,000
1,260
69,300
81,900
1,640
90,100
30%
1,260
69,300
81,900
1,640
90,100
30%
63,000
Chief EC, ECB
63,000
1,260
69,300
81,900
1,640
90,100
30%
Auditor General
63,000
1,260
69,300
81,900
1,640
90,100
30%
Commissioners
(RCSC, ACC, ECB)
50,445
1,010
55,495
63,200
1,265
69,525
25%
The National Judicial Commission (NJC) had recommended that the pay scale of the Chief
Justice of the High Court not be at par with the Justices of the Supreme Court as it created
certain constitutional issues (equal pay for work of equal value) and possible administrative
inconsistencies in case the Chief Justice of the High Court is subsequently elevated to a Justice
of the Supreme Court. The NJC had proposed the existing pay scale of Chief Justice of the
High Court to be fixed at Nu. 52,465–1,050–62,965, which is lower than that of a Justice of
Supreme Court by 20 percent.
The Commission recognized that the Drangpons of Supreme Court, Chief Justice of High
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Court and the Drangpons of the High Court are 10 years tenure-based constitutional positions
where as other constitutional positions have a tenure of only 5 years. Furthermore, unlike
other constitutional positions, these positions in the Judiciary have a career path, as indicated
by the rationale for maintaining the difference between Chief Justice of the High Court and the
Justices of the Supreme Court, as was recommended by the NJC.
The Commission recommends to restructure the pay scales of the Constitutional Post Holders
of the Judiciary, whereas the salary structures for the other Judiciary posts are recommended
to be at par with the civil service in keeping with their position levels.
Table 8.5: Pay Scale of Post Holders of Judiciary
Existing pay scale
Position Level
Recommended pay scale
Percent
Min.
Incre.
Max.
Min.
Incre.
Max.
Drangpons of SC
63,000
1,260
69,300
75,600
1,510
83,150
20%
Chief Justice of HC*
63,000
1,260
69,300
66,600
1,330
73,250
6%
Drangpons of HC**
50,445 1,010 55,495 63,200
1,265
69,525 14%
*Structure change; **14 percent on 2011 gross salary (basic plus lumpsum salary allowance)
The recommendation of allowances and other emoluments are provided separately under the
allowances chapter.
8.5
Privy Council
The Lhengye Zhungtshog approved the pay scales and entitlements of the Privy Council
Members in 2011. The present Chairperson draws the same pay and allowances of the Cabinet
Ministers. The pay scales of Members were fixed at Nu. 50,445-1,010-55,495.
The pay scales of the Members are recommended to be revised by 25 percent while the
Chairperson is equated to that of the Cabinet Ministers.
Table 8.6: Salary Scale of Privy Council
Pay Scale 2014
Position Level
Chairperson
Council Members
Min.
120,000
63,200
Incr.
Max.
Increase After
Merger
PerAmount
cent
2,400 132,000
42,000
54%
1,265
12,755
25%
69,525
With regard to revision of the allowances and other entitlements, it is covered under the
allowances chapter.
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8.6
Office of Attorney General
The Lhengye Zhungtshog approved the Attorney General’s pay scale and entitlements in 2010.
The pay scale was fixed at Nu. 63,000-1,260-69,300.
The Commission recommends a 20 percent revision on the existing salary of the Attorney
General.
Table 8.7: Recommended Pay Scale of Attorney General
Pay Scale 2014
Position Level
Attorney General
Min.
Incr.
Max.
75,600
1,510
83,150
Increase After
Merger
Amount Percent
12,600
20%
With regard to revision of the allowances and other entitlements, it is covered under the
allowances chapter.
8.7
Other Public Servants (GSP, ESP, NFE, RAPA, LG, Para, Consolidated Contract)
The pay scales for this section of the public servants were fixed in 2009. During the time when
the lumpsum salary allowances were approved for regular civil service, only GSP and Pararegular were included as beneficiaries.
The Commission recommends that the lumpsum salary allowance (at rates consistent with
the 2011 rates for civil service) be first merged to the existing pay scales for those who were
not covered at the time when the 2011 lumpsum salary allowance were approved. On this,
the Commission recommends the 20 percent salary revision.
8.7.1
General Service Personnel (GSP) and Elementary Service Personnel (ESP)
GSP and ESP are recruited to meet the requirement of skilled and semi-skilled services in the
government. Currently, there are about 1,239 GSP and 3,155 ESP under public service that are
hired normally on two-year contract terms. The numbers have been increasing over the years
just like the civil service.
A 20 percent revision after merger of lumpsum salary allowance is recommended for the
GSP employees. It is further recommended that the existing GSP-I and GSP II positions be
merged into a single GSP position. A 40 percent revision is recommended for ESP employees,
as they were not given the lumpsum salary allowance in 2011.
Table 8.8: Recommended pay for GSP and ESP
Position Level
Pay Scale 2014
Increase After Merger
Amount
Percent
GSP
9,000
1,477
20%
ESP
7,000
2,000
40%
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The GSP and ESP employees should continue to draw salaries at the existing scales till their
current contracts expire. On re-appointment and for new recruits, the recommended pays
should apply.
With the recommended revisions, the annual salary costs to the government on account of
GSP employees would increase from Nu. 95.144 million Nu. 130.560 million, and on account
of the ESP employees, from the existing Nu. 189.3 million to Nu. 265.020 million. In view of
the government’s strategy to promote private sector development, it is recommended that, in
due course of time, the GSP and ESP services be outsourced to the private sector and even to
the corporate sector. The private and the corporate sectors might be able to provide better and
effective services to the government. Meanwhile, the government might also like to consider
curtailing the hiring of more employees in the GSP and ESP categories.
Although GSP and ESP categories of public service are entitled for some benefits like civil
servants, they are not covered under PF and pension schemes. In keeping with the provisions of
the Labour and Employment Act, 2007, it has been proposed that for those under Consolidated
Contract, GSP and ESP, coverage under the pension or provident fund schemes be provided. If
implemented, the financial implications to the Government would be high.
The Commission recommends that the Government implement terms and conditions of
their contract services so that the provisions of the Labour & Employment Act, 2007 are
not breached. In order to institute a comprehensive social protection scheme, it is also
recommended that the government may like to explore a Retirement Policy Scheme to cover
the ESP/GSP, and other formal sector workforces including the private and the self-employed.
8.7.2
Non-Formal Education (NFE) Instructors
The salaries for the NFE instructors were revised to Nu. 6,000 per month in 2009 from Nu.
4,500 per month that had been set in 2007. The allowance for regular teachers who shoulder
additional responsibility of teaching NFE was also revised from Nu. 1,500 in 2007 to Nu.
2,000 per month in 2009.
The Commission recommends a monthly pay of Nu. 8,400 for NFE instructors, a 40
percent revision as they were not provided lumpsum salary allowance in 2011. However, a
revision of the allowance of Nu. 2,000 per month for regular teachers teaching NFE is not
recommended.
8.7.3
Consolidated Contract (mainly Teachers)
The civil service recruits employees for specific purposes and for time bound periods, and
such recruits are placed under Consolidated Contract. Such employees are generally recruited
in the teaching profession and their remuneration was fixed at Nu. 10,000 per month.
The Commission recommends a monthly pay of Nu. 14,000 for those under Contract
Consolidated category, a 40 percent revision as they were not provided with the lumpsum
salary allowance in 2011. The Commission also recommends that such Consolidated Contract
employees be phased out.
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8.7.4
Royal Academy of Performing Arts (RAPA)
The pay for the RAPA staff (S4-O3) was revised by 45 percent in 2005 and by another 45 percent
in 2009. These revisions were merged in July 2006 and July 2010 as part of the pay scales.
The RAPA staffs are also not covered under Pension and Provident Fund scheme. Currently,
the RAPA staff are paid maximum gratuity of Nu. 30,000 on retirement. The lumpsum salary
allowance of 2011 was not approved for those employees with RAPA.
The Commission recommends a 37 percent revision in the salary for RAPA as they were
not provided the lumpsum salary allowance in 2011, and that their salaries be mapped
to equivalent positions in the civil service. While the gratuity ceiling of the civil service is
recommended to be applied to employees of RAPA, the retirement age should be determined
as per the nature of their jobs.
8.7.5
The Local Government
The role of the Local Government is an extremely important one under the Democratic
Constitutional Monarchy. Attracting and motivating competent people as functionaries in the
Local Government is a major challenge as the existing pay and allowances are not commensurate
with their roles and responsibilities. While noting the challenges, the Commission also
recognized that for a small country that is increasingly getting well connected by motorable
road and modern communication facilities, the size of the local governments, particularly at
the Gewog levels, were expanding and had grown very fast during the 10th FYP.
The Commission also noted that while the local functionaries and their administrative
machineries were critical to the democratic process, devolution of power and decentralization,
there were areas that could be considered to be overlapping with the Dzongkhag administration
and the sectors that were present at the Gewog levels. The roles and responsibilities of the
functionaries at the Gewog and Dungkhag levels need rationalization and these functionaries
could shoulder additional responsibilities without compromising the quality of services to the
people.
The Commission strongly recommends the rationalization and consolidation of the number
of Gewogs and Dungkhags with a view to reduce the administrative machinery at the Local
Government level. This could create fiscal space that could be used towards enhancing pay
and allowances of the very Local Governments.
When the pay and allowances of the civil service was revised in 2009 and 2011, the salaries
of the representatives of the Local Governments were also revised. Gups, Mangmis and
Gedrungs received a 65 percent increment on their 2005 pay scales in 2011. The pay of the
Tshogpas was revised to Nu. 5,000 in 2012 from Nu. 1,000 in 2005. Although the salaries for
the functionaries at the Gewog levels were revised as recently as in FY 2011-12, the starting
pay scales of these local functionaries were also quite low.
The first elections of Thrompons and Thromde Thuemi/Tshogpa were held during the 10th FYP.
The pay scale of the Thrompon of a Thromde ‘A’ was fixed at par with the pay scale of civil
38 of 115
servants at EX/ES-2 level with lumpsum monthly salary allowance of Nu. 5,700. Thrompons
are also entitled to rent-free accommodation or in lieu thereof housing allowance of 20
percent of the basic pay. The pay and allowances of Thromde Thuemi/Tshogpa are at par with
Dzongkhag Throm and Gewog Tshogpa.
Table 8.9: The existing salary and allowances for local government
Salary & Allowances
Position Level
Thrompon
Gup
Mangmi
Geydrung
Tshogpa
Strength
4
205
205
205
1,085
Pay scale
38,475-77042,324
14,355
10,765
9,570
5,000
6,000
4,500
-
-
500
-
-
-
Monthly Salary Allowance
5,700
Annual TA/DA within Gewog
Monthly Voucher Allowance
1,000
Monthly House Rent
Allowance
7,695
The local government institutions are gaining importance with gradual expansion and
decentralization. The roles and responsibilities along with the accountability of the local
government have also increased over the years. The local governments are required not only
to plan and execute those plans, but also take up the activities of the central government
within their administrative boundaries. The need for qualified and competent officials is critical
to ensure success in the execution of the plans at the local government level. In order to
attract qualified and competent local government representatives, it is essential to ensure that
the salaries and entitlements for the local governments are made more attractive. Extensive
consultations were held with the Ministry of Home & Cultural Affairs in respect of the Local
Governments.
The Commission recommends the revision of the Thrompons’ salary at the same level as for
EX/ES-2 in the civil service and 40 percent revision for Thromde Thuemis/Tshogpas.
The Commission recommends a 36-40 percent revision in the salaries of the Gups, Mangmis,
Gedrungs, and Tshogpas at the Gewog level. The Commission also recommends to enhance
the annual travel grant for travel within the Gewog to Nu. 18,000 for Gups from the existing
Nu. 6,000, and to Nu. 13,500 for Mangmis from the existing Nu. 4,500.
39 of 115
Table 8.10: The Financial implications from Salary Revision of LG
Position Level
Thrompon
Strength
Recommended (Nu.)
Min
Incre.
Max.
1,060
58,300
Annual Implication (Nu.)
4
53,000
Gup
205
20,000
49,200,000
Mangmi
205
15,000
36,900,000
Geydrung
205
13,000
31,980,000
1,085
7,000
Tshogpa
Annual Implication
2,544,000
91,140,000
211,764,000
Net Increase from Existing (%)
39%
The revision of the allowances and other entitlements are covered under the Allowances’
chapter.
8.8
Civil Servants
The remuneration of civil servants, from Cabinet Secretary to the lowest O4 level, has been
revised from time to time to meet the increasing cost of living, and to retain and build
professionalism in civil service system, and to motivate the civil servants to serve the Tsa Wa
Sum.
Table 8.11: Salary Revision
A number of allowances that were in place prior to being consolidated and merged with the
salary in 1988; with increases ranging from 122 percent to 341 percent (EX – GSP level) from
the then 1985 pay scales. Since then, salaries of the civil servants have been revised more
than seven times and the last revision was in 2011 in the form of lumpsum salary allowances.
The Commission recommends a 20 percent revision of the pay scales of all civil servants
after consolidation of the lumpsum salary allowances on the 2010 pay scales. Further, the
Commission recommends that the pay scale for the Cabinet Secretary be fixed at 14 percent
higher than that of the Government Secretaries considering the higher responsibilities and
accountability of the Cabinet Secretary.
40 of 115
Table 8.12: Recommended Pay Scales of Civil Service
Position Level
Pay Scale 2014
Increase After Merger
Min.
Incr.
Max.
Amount
Percent
Cabinet Secretary
75,600
1,510
90,700
12,600
20%
Government Secretaries
66,600
1,330
79,900
11,110
20%
EX/ES-1
63,200
1,265
69,525
10,546
20%
EX/ES-2
53,000
1,060
68,900
8,825
20%
EX/ES-3
44,800
895
58,225
7,460
20%
P1
35,300
705
45,875
5,896
20%
P2
31,200
625
40,575
5,229
20%
P3
27,300
545
35,475
4,532
20%
P4
24,300
485
31,575
4,024
20%
P5
19,900
400
25,900
3,298
20%
S1
18,300
365
23,775
3,024
20%
S2
16,600
330
21,550
2,759
20%
S3
15,200
305
19,775
2,553
20%
S4
13,500
270
17,550
2,277
20%
S5
12,500
250
16,250
2,115
20%
O1
11,800
235
15,325
1,949
20%
O2
11,100
220
14,400
1,846
20%
O3
10,100
200
13,100
1,690
20%
O4
9,400
190
12,250
1,587
20%
8.8.1
Compression Ratio
The Compression Ratio, the ratio of the salary of the highest civil service level (EX/ES1) to
the lowest level (O4), gives an idea of the overall salary differential in the civil service. The
compression ratio for the basic pay in the civil service has remained the same at 6.7 since
2006 since the same percentage increases were considered each time there was a salary
revision. However, after accounting for PIT, the compression ratio has reduced over the years.
41 of 115
Table 8.13: Compression Ratio
Position Level
Basic Pay
2006
2010
2014
Highest Level (EX/ES1)
33,970
45,860
63,200
Lowest Level (O4)
5,040
6,805
9,400
Compression Ratio
6.7
6.7
6.7
The compression ratios in the private sector are higher as employees at the lower levels are
paid much less than those at similar positions in the civil service. However, the pay scales
of those at the top levels in private and corporate sectors tend to be significantly higher than
their counterparts in the civil service. Since the civil service pay at the lower levels are more
generous than those in private sector, the civil service continues to be the preferred option for
job seekers at these levels.
The pay structures for the corporate sector are generally the same as the civil service pay
structure with a differential of about 15 percent. When the first corporations were curved out
of the civil service, the pay scales were at least 45 percent higher for the corporate sector
when compared to the civil service. In recent years, the differential reduced to 30 percent
and then to the present 15 percent, which have been reached through certain understanding
between the public sector corporate bodies and the Ministry of Finance. Considering the other
allowances of the corporate sector, the current differential between the corporate sector and
civil service is about 1.3.
Going forward, it is important that pay differentials between and within the civil and the
corporate services reflects demand and supply for skills in the market and also reflect the
tenures and the terms and conditions of the posts. More and more professionals may leave the
civil service for private and corporate sectors unless the differentials can be maintained within
some acceptable limits.
Literatures suggest that compression ratio alone is not the best method to measure pay
dispersion as it could be manipulated. Therefore, to obtain a more rounded perspective on
pay dispersion, it is also useful to look at the multiple of the top pay to the median pay, as this
would be a better indicator of pay dispersion and also more difficult to manipulate.
Using this measure, the multiple of top pay to the median pay for Bhutan is about 7.5
times considering the P5 pay as the median pay while the top pay considered is that of the
Prime Minister. This is well within what is observed in other countries. However, future Pay
Commissions may like to consider this ‘multiple’ while trying to arrive at an acceptable level
of pay dispersion while at the same time ensuring that the principle of “equal pay for equal
value of work” is upheld.
42 of 115
8.9
Personal Income Tax (PIT)
Currently, there are 25,643 public servants who are in the tax brackets of Nu. 100,000. With
the recommended revision in pay and allowances, the additional number of public servants
who will enter into the current tax bracket is 573.
While “equal pay for equal value of work” will always be a very important consideration in
fixing pay structures and allowances, given the present economic condition and low salary
structures, it is those at the lower levels of the civil and public service who face the brunt of
the high inflation due to the spiraling prices of food and non-food items. For the civil servants
at the lower levels, more than 50 percent of their salaries are spent on rent, especially in the
urban centres of Thimphu and Phuentsholing and places like Wangdue Phodrang where there
is a huge shortage of housing stock due to the mega hydropower projects.
The Commission, in an attempt to alleviate those at the lower levels, generally recommended
for the incorporation of a lumpsum salary allowance (that had not been incorporated in their
pay structures in 2011) before the recommended revision of 20 percent is affected on fixing
of new pay scales.
The Commission strongly recommends for increasing the taxable income bracket to Nu.
200,000 from the existing Nu. 100,000, which would benefit the lower income level public
servants with higher take home salaries.
There would still be a net increase of Nu. 9 million in PIT from the present PIT collections.
Table 8.14: Personal Income Tax Slab
Position
Level
Existing
Salary with
Existing PIT
Slab
Revised
Salary with
Existing PIT
Slab
Revised
Salary with
Proposed
PIT Slab
Total Public Servants
Exemption
Threshold
Number of
Minimum
TDS CollecPublic Ser- Percent
Monthly Taxtion
vants within Change
able Income
(Nu. in Mill.)
Tax Bracket
Percent
Change
100,000
8,333
25,643
100,000
8,333
26,070
2%
293.15
35%
200,000
16,667
13,121
-49%
226.67
4%
32,725
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217.62
9
ALLOWANCES
ALLOWANCES9AND
BENEFITSAND BENEFITS
The Commission made an earnest effort to work towards a “clean” wage bill (one where
all allowances and benefits are monetized into one pay) and thus reviewed the existing
allowances closely. In reviewing the experiences of other countries, the Commission noted that
a “clean” wage bill has its own challenges; one major drawback being the additional burden
on pension. While the need for continuation of the existing allowances was recognized, the
Commission recommends some modifications to allow greater transparency and flexibility in
its treatment going forward.
Currently, there are two different types of allowances in the Government. They are Lumpsum
Allowances and Salary Based Allowances. Lumpsum allowances are those that are not linked
to basic pay and provided as a fixed amount, whereas, the salary based allowances are those
that are linked to the basic pay and are provided as varying percentages of the basic pay.
The main recommendation is to convert all allowances into lumpsum allowances as opposed
to providing them based on the basic pay scale. Further, the Commission recommends
that these allowances be reviewed periodically so that they are removed when no longer
necessary. The Commission also recommends that allowances need to be sharpened to ensure
that they have the desired impact such as the allowances that are being recommended to
incentivise people to upgrade their qualifications with the hope that it will lead to better
learning outcomes for the students.
9.1
Lumpsum Allowances
This section describes the various allowances under the category of the lumpsum allowances.
The recommendations are also included under the respective headings.
9.1.1
Red Scarf Allowance
The civil servants who are awarded red kabney are currently entitled to a monthly Red Scarf
Allowance of Nu. 100 and this has been in place for over two decades.
Since this is a Royal Prerogative, the Commission did not review the Red Scarf Allowance.
9.1.2
Patang Allowance
The practice of wearing a Patang is a custom and tradition signifying the importance of the
respected positions in the public service. Thus far, a male public servant, who is required to
wear a Patang but is not provided one by the Government, is given an allowance for buying
the Patang. Before 2009, the allowance was Nu. 25,000 and was later revised to Nu. 50,000
as one time grant if the Patang is not provided by the Government. The Patang Allowance was
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last revised in 2009, and since then the Government is also providing the Patangs to most of
the recipients.
It is recommended to maintain the Patang Allowance at Nu. 50,000 as one time grant if the
Patang is not provided by the Government.
9.1.3
High Altitude Allowance
Civil servants posted at high altitudes have to work under very severe climatic conditions
and majority of these places do not even have basic amenities. Apart from the difficulties
faced by the civil service at the place of posting, these civil servants have to maintain two
establishments with one at his/her work place and another for his/her separated families in
another place leading to additional expenses. Currently, High Altitude Allowance is provided
at Nu. 1,000-2,000 per month for those working at places above 10,000 ft.
A revision in the monthly High Altitude Allowance is recommended at Nu. 3,000 for the
places above 12,000 ft (Annexure 4) and Nu. 2,000 for the places between 10,000 ft and
12,000 ft (Annexure 5).
9.1.4
Difficulty Area Allowance
The rural areas in Bhutan have developed rapidly in recent years, in particular during the 10th
FYP, with huge investments made in the development of infrastructure. Most of the places that
were once considered remote now have access to basic facilities like telecommunication,
electricity, roads, health and education. Nevertheless, there are still some remote places
where development has not reached and civil servants are often not willing to take a posting
in these places due to difficult conditions.
The objective of the Government to bring development to the remote areas may not be achieved
unless civil servants are willing to get posted to such places for which adequate incentives
need to be provided. Therefore, a monthly Difficulty Area Allowances using dholams as a
measure are provided to civil servants posted to such places.
At present, officials receive Nu. 2,000 per month for the first dholam from the nearest
motorable road and Nu. 500 for every additional dholam with a maximum ceiling of Nu.
5,000 per month, which is equivalent to 7 dholams. With the increase in transportation and
other costs in recent years, the present Difficulty Area Allowances are not adequate to meet
the increasing costs and to incentivize civil servants for the difficulties they have to live with.
A problem with the earlier system was also that while transportation and other related costs
increased with each dholam, the allowance was highest for the first dholam and much lower
for the balance dholams.
To attract and motivate civil servants posted to remote areas, the Difficulty Area Allowance
is recommended to be revised to Nu. 2,000 for each dholam and the maximum ceiling raised
by 100 percent to Nu. 10,000 per month for a maximum of 5 dholams. The implementation
of the revision in the Difficulty Area Allowance is however contingent on the Government
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reviewing and rationalizing the existing dholams nationwide.
Table 9.1: Difficulty Area Allowance
Description First Dholam
Allowance per additional Dholam
Maximum Allowance
Maximum Dholam
Existing
2,000
500
5,000
7
Revision
2,000
2,000
10,000
5
Percent
Change
0%
300%
100%
-29%
There are also some places of posting, such as the Manas National Park, where civil servants
face great difficulty and thus need to be provided with Hardship Allowances even if they do
not meet the dholam criteria.
In such specific situations, the Commission recommends that the Ministry of Finance be
empowered to extend, on a case-by-case basis, Hardship Allowances as it deems reasonable.
9.1.5
Uniform Allowance
The Government provides either uniform or uniform allowances to those civil servants who
are required to wear uniform by their profession. In most cases the government provides
uniforms and only medical nurses are provided uniform allowance of Nu. 3,000 per annum.
Table 9.2: Uniform Allowance
Position
Level
Nursing
staff
Medical
Doctors/
BDS &
Drungtshos
Technicians/
Menpas/
Clinical
Officials/
HA/BHW
Strength
799
Existing
Proposal
Recommended
Financial
Financial
Financial
Nu/AnNu/
Nu/
%
ImplicaImplicaImplicanum
Annum
Annum
change tion
tion
tion
3,000
2,397,000
6,000
4,794,000
-
900
140,400
-
900
4,500
3,595,500
50%
Not
156
1797
Applicable
Not Applicable
46 of 115
Not recommended
-
1,617,300 Not recommended
-
Ward
boy/girl,
cleaner,
sweeper
Total
489
Not Applicable
-
1,800
2,397,000
880,200
7,431,900 1,500
733,500
New
4,329,000
81%
It has been proposed to revise the Uniform allowances for nurses by 100 percent and to
introduce Uniform Allowances for doctors, health professionals, and supporting staff (ward
boy, girl cleaner & sweeper).
The Commission recommends for a 50 percent increase in the annual Uniform Allowance for
nurses from the present Nu. 3,000 to Nu. 4,500 and the introduction of an annual Uniform
Allowance of Nu. 1,500 for the supporting staff. No Uniform Allowance is recommended for
doctors and other health professionals.
9.1.6
Radiation Allowance
The medical professionals like radiologist and other relevant personnel involved in carrying
out radiography and x-rays are provided Radiation Allowance of Nu. 300 per month as a
compensation for possible radiation risk to their lives. This allowance has not been revised
since 1999 and a proposal for increasing it to Nu. 1,500 per month was received.
Considering the associated risks, the Commission recommends a 100 percent revision of the
Radiation Allowance to Nu. 600 per month.
9.1.7
Cash Handling Allowance
The Cash Handling Allowance is provided to avoid problems like cash shortages and misuse
of cash, which arises from handling cash especially by accounts and revenue personnel. With
the expansion of information technology, most of the transactions today are online system
based and this has reduced the cash transactions considerably.
The Commission does not recommend revision of the existing Cash Handling Allowance.
9.1.8
Overtime Allowance
Overtime allowance is provided to civil servants who are in position levels of S4 and below to
compensate working during off-hours on weekdays, weekends and holidays. This is provided
on pro rata basis, which is limited to three hours per day during weekdays and five hours per
day during weekends and holidays.
The Commission doesn’t recommend any change to the existing rates for Overtime Allowance.
47 of 115
9.1.9
Communication Allowance
Under communication allowance, the Government covers expenses for residence telephones
and for purchase of mobile vouchers. The beneficiaries are Ministers, Holders, Members and
Commissioners of Constitutional Offices, Government Secretaries, Joint Secretaries, Heads of
Departments, Dzongdags, Drangpons, Drongrabs, Dungpas, Gups and other eligible public
servants. More and more of the civil servants are switching to mobile phones rather than use
the traditional handset phones. However, mobile charges have reduced drastically over the
years with competitions among the service providers, the technological advances, and the
increased volumes.
The Commission does not recommend any revision in the Communication Allowance.
9.1.10 Leave Encashment (LE)
Civil servants are currently entitled to earned leave of 2.5 days in a month or one month per
annum which can be accumulated to a maximum of 90 days. The BCSR 2012 requires a
minimum of 30 days leave balance for encashment and only one encashment is allowed in
a financial year. As per BCSR 2012, employees have the option either to take earned leave or
en-cash one month’s basic pay in lieu of earned leave. Although there is no change in the LE
formula, due to the salary revision, civil servants’ LE would increase by at least 38-40 percent
due to the merger of the existing lumpsum salary allowance and the revision of 20 percent in
pay scales.
The Commission does not recommend any revision in Leave Encashment.
9.1.11 Leave Travel Concession (LTC)
Civil servants are granted an annual Leave Travel Concession equivalent to one month’s basic
pay with a maximum ceiling of Nu. 15,000 to cover the travel expenses on taking leave.
The last revision of LTC was in 2006 and it coincides with that of P5 basic salary. It is not
the practice of the Bhutanese civil servants to take actual leave, and therefore civil servants
normally not only avail LTC but also encash the accumulated earned leave.
The Commission does not recommend any revision of LTC ceiling of Nu. 15,000.
9.2
Salary Based Allowances
The Commission, on review of the existing salary based allowances, has fixed these as
lumpsum allowances after consolidation of the existing lumpsum salary allowances on the
2010 pay scales. To ensure greater transparency and equity to people in transition under the
PCS, it was felt that there was a strong rationale to fix salary based allowance as a lumpsum
amount. Such lumpsum allowances will not only be fairer for those receiving the allowances,
it will be cheaper for the exchequer as it would not increase due to annual increments or
whenever salary is revised.
48 of 115
The Commission recommends that Salary Based Allowances be provided as a lumpsum of the
2011 gross salary (2011 basic merged with the 2011 lumpsum salary allowance).
9.2.1
Professional Allowance
BCSR 2012 provides that “The Government shall provide scarcity allowance to attract and
retain professional civil servants in certain skills and occupational groups. It shall be removed
as and when the problem is redressed”. Unlike in the past, the supply of the university graduates
seeking employment in civil service has increased manifold. Except in the medical profession,
many of the other fields which were once considered as having scarcity problems no longer
have difficulties in getting new graduates to fill the vacancies. The main challenge today is the
attraction and retention of employees, mainly in the field of medical, teaching, anti-corruption
and audit due to the nature and public perception of the job. Since scarcity is not an issue any
more, it is termed as a Professional Allowance instead of a Scarcity Allowance. The supply
projection of the medical and teaching profession in the 11th FYP is given in the Annexure 6.
9.2.1.1 Professional Allowance for Medical
In recognition of the importance of medical profession and their impact on the quality of
health and related services for the general public, the government within its limited resources
has been providing allowances over the years to attract and retain medical professionals.
During the salary revision in 2009, a more benign allowance varying from 10-40 percent of
basic pay was granted.
Notwithstanding the likely impact on the delivery of quality health services but more in
consideration of the resource constraints of the Government, no new allowances or revision
of the existing allowances is recommended despite the strong representations for an upward
revision of the Medical Allowance.
9.2.1.2 Professional Allowances for Teaching
The allowances for teachers are provided in order to attract and retain the best and brightest
candidates and experienced teachers, and also for deployment of teachers to the difficult and
remote areas. As of June 2013, the number of teachers has increased to 6,728, constituting
about 28 percent of the civil service strength. More than 65 percent are working in 419
schools located in remote areas across the country. The recruitment, retention and deployment
of truly dedicated teachers in remote areas is a major challenge for the education sector.
The existing teaching allowance of 10 to 20 percent is provided depending on the number of
years served to attract and retain the right and dedicated candidates.
In view of the nature of job and the challenges in recruitment and retention, the Commission
recommends to continue with the existing Teaching Allowances but to further recognize and
incentivize qualification and service seniority. It is recommended that teachers and lecturers
49 of 115
with Masters and PhD degrees receive 10 percent higher Teaching Allowances than those
with Bachelors’ and below degrees.
The Education Allowance is also applicable to the Royal University of Bhutan. The additional
University Allowance of 15 percent is however not recommended.
Table 9.3: Recommended teaching allowance
Position Level
ES1
ES2
ES3
P1
P2
P3
P4
P5
0-5 Year
6-10 Years
11 Years and above
With
With
With
Without
Without
Without
Master
Master
Master
Master
Master
Master
Degree &
Degree &
Degree &
Degree
Degree
Degree
Above
Above
Above
10,550
13,150
10,550
15,800
10,550
18,400
8,850
11,050
8,850
13,250
8,850
15,450
7,450
9,350
7,450
11,200
7,450
13,050
5,900
7,350
5,900
8,800
5,900
10,300
5,200
6,500
5,200
7,800
5,200
9,100
4,550
5,700
4,550
6,850
4,550
7,950
4,050
5,050
4,050
6,100
4,050
7,100
3,300
4,150
3,300
5,000
3,300
5,800
9.2.1.3 Scarcity Allowance for Mathematics and Physics Teachers
The expatriate teachers in mathematics and physics are currently provided 20 percent of basic
pay as scarcity allowance which was instituted in 2009.
With sufficient numbers of Mathematics and Physics teachers, the Commission recommends
withdrawal of the allowance.
9.2.1.4 Professional Allowance for Royal Audit Authority
The auditors under Royal Audit Authority are paid 20 percent of basic pay to attract qualified
candidates at entry level and to retain the experienced professionals in the organization.
The Internal Auditors (IAs) in the various agencies currently do not receive audit allowance. The
recruitment and retention of IAs is a challenge and in some of the agencies, the Government
has not been able to deploy adequate number of IAs. Furthermore, the responsibilities of IAs
do not vary very much from RAA auditors, except that they operate as part of the management.
They are mandated to conduct audits and reviews and provide the agencies with independent
and objective assurance on the efficiency and effectiveness of governance, risk management,
control and accountability. The IAs also propose and recommend improvements to the
agency’s efficiency and effectiveness in terms of achieving the organizational objectives and
proper use of public resource, greatly easing the work load of the RAA.
50 of 115
The Commission recommends the same level of Audit Allowance for RAA, and the extension
of this allowance to all IAs.
9.2.1.5 Professional Allowances for Anti-Corruption Commission
The officials in the Anti-Corruption Commission (ACC) are provided Professional Allowances
in the form of Investigation and ACC Allowances. Of the 67 officials excluding Chairperson
and Commissioners, 42 employees are eligible for Investigation Allowance at 45 percent of
basic pay and the remaining 25 officials are eligible for the Professional Allowance of 20
percent.
While recognizing the difficult conditions under which the ACC has to operate, the
Commission recommends to maintain the same levels of the Professional Allowances for
ACC.
9.2.1.6 Professional Allowance for Department of Civil Aviation (DCA)
To effectively fulfill safety oversight responsibilities for international civil aviation and to
address the shortage of professionals, it is important to establish a competitive remuneration
package for professionals in the DCA consistent with their education, technical knowledge
and experience that is comparable to those in the industry whose activities they monitor and
supervise as a basic principle practiced elsewhere.
The Commission recommends lumpsum allowance specifically for the Airworthiness Officer
(AO) and Flight Operation Officers (FOO) of DCA.
Table 9.4: Allowance for AO & FOO under DCA
Position Level
P1
P2
P3
P4
P5
S1
9.2.2
Number of Active Years of Service as FOO & AO
6-10 years
11-15 years
Above 15 years
7,350
10,300
13,250
6,500
9,100
11,700
5,700
8,000
10,250
5,100
7,100
9,150
5,150
5,800
7,500
3,850
5,350
6,900
House Rent Allowances for Civil and Public Servants
In view of their important roles and responsibilities, some of the senior public and civil servants
are provided rent free Government accommodation or in lieu thereof a House Rent Allowance
varying from 20 to 30 percent of their basic pay. The Commission was not able to establish a
basis for why some are provided Housing Allowance of 20 percent and while others get 30
percent. Based on the current market, public servants on an average spend around 20 percent
51 of 115
of their salary income on house rents. The Housing Allowance is an additional benefit for
certain positions only.
The Commission recommends that all public servants entitled for House Rent Allowances be
fixed as a lumpsum at 20 percent of the revised salary.
Table 9.5: Recommended Housing Allowance for Senior Officials
Sl.
Position Level
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
25
26
27
28
29
30
Prime Minister
Cabinet Ministers
Speaker and Chief Justice of SC
Opposition Leader & Chairperson of the NC
Deputy Speaker of NA
Deputy Chairperson of NC
Drangpons of the Supreme Court
Chief Justice of HC
Drangpons of the High Court
Chairperson, RCSC
Chairperson, ACC
Chief Election Commissioner, ECB
Auditor General
Member of Constitutional Bodies
Chairman of Privy Council
Members of Privy Council
Attorney General
Thrompons
Cabinet Secretary
Government Secretary
Commission Secretary (GNHC, NLC & NEC)
Secretary General of NA & NC
Dzongdags
Drangpons of the Dzongkhags
Drangpons of the Dungkhags
Dungpa
Dzongrab
Executive Secretary of Thromdey A
52 of 115
Number
Recommended
Lumpsum Housing
Allowance
1
10
2
2
1
1
56
5
1
5
1
1
1
1
8
1
2
1
4
1
10
3
2
20
26
15
15
20
4
30,000
24,000
26,400
24,000
15,120
15,120
13,320
15,120
13,320
12,640
16,380
16,380
16,380
16,380
12,640
24,000
12,640
15,120
10,600
15,120
13,320
12,640
12,640
8,960
8,960
7,060
7,060
7,060
8,960
Assuming that all entitled officials are provided housing allowances, the estimated annual
financial implication is Nu. 33 million.
9.2.3
House Rent Allowance for other Civil and Public Servants
Access to affordable housing has become an issue for civil and public servants at lower levels,
particularly those living in Thimphu, Phuentsholing, and Wangdue Phodrang. In Phuentsholing,
many Bhutanese live across the border on the Indian side due to affordability and availability
problems. For the civil and public servants higher up in the income ladder and for those living
in other places of Bhutan, while increasing house rents and non-availability of housing stock
are still considered as issues, the rents are considered to be still within manageable levels.
The pay revisions, which make up for income erosion due to inflation including for housing,
will mean that civil and public servants in general would not have to spend a disproportionate
percentage of their pay on housing.
The need to provide affordable housing is an issue concerning really the low-income civil
servants and particularly in places like Thimphu and Phuentsholing. Since house rent
allowances have already been incorporated within the pay structures, introducing separate
house rent allowances for all civil and public servants is neither affordable nor sustainable
and it is unlikely to solve the real problem: the shortage of affordable housing for lowincome groups. To address this problem, the government would have to intervene and find a
way to channel investments into building up affordable housing stock, which the market has
failed to provide.
In general, public servants renting National Housing Development Corporation (NHDC) and
National Pension Provident Fund (NPPF) housing pay lower rents as compared to those who
rent private buildings. The lower rents and open ended occupancy tenures of NHDC and NPPF
housing have benefited those civil servants who have managed to get apartments. To extend
the benefit to other civil servants, the Commission recommends fixing the occupancy tenure.
The NHDC has already signed tenancy agreements for periods of two years renewable for a
maximum of five times and encourage the civil servants owning private homes to surrender
the quarters for the benefit of other civil servants. Similar approach could be initiated by NPPF.
The Commission further recommends that the government find a way to enhance investments
in low income housing by bringing the NPPF (for financial resources), the NHDC (for
construction and management) and the NLC (for provision of land to make investments in
low income housing feasible) together to increase the supply of affordable housing for low
income groups starting with Thimphu, Phuentsholing, and other parts of the country where it
is determined to be necessary as soon as possible. Where possible, public private partnerships
should also be explored, incentivized and promoted.
53 of 115
9.2.4
Officiating Allowance
As per BCSR 2012, the Officiating Allowance is paid to those who are officiating managerial
positions of level P1 (without sub-levels) and above including Heads of Institutes subject to
conditions stated in BCSR 2012. However, while the financial implications are not very high,
it is possible that such tasks can be carried out without financial incentives like in the past.
In lieu of Officiating Allowances, the Commission recommends that meritorious or
outstanding certificates in recognition of their contributions be credited for purposes of
consideration of postings, trainings and promotions.
9.3
Discretionary Grants
Discretionary grants, that are not taxable, are provided for certain levels of civil and public
services. These grants are supposed to be used at discretion during travel within the country
towards soelras and other such incidental expenses, for which the government should neither
be providing separate budgets nor accepting claims.
Table 9.6: Annual Discretionary Grants (In Nu. )
Sl.No.
1
2
3
4
5
6
7
8
9
Position Level
Strength
Prime Minister
Speaker of NA
Chief Justice of SC
Cabinet Minister
Chairperson of NC
Opposition Leader
Chairperson of Privy Council
Member of Parliament
Dzongdags
TOTAL
1
1
1
10
1
1
1
58
20
Amount
300,000
200,000
200,000
200,000
200,000
200,000
200,000
100,000
50,000
Annual Implication
300,000
200,000
200,000
2,000,000
200,000
200,000
200,000
5,800,000
1,000,000
10,100,000
It is recommended that such allowances be in future merged with the pay structures to work
towards a “clean” wage bill. Meanwhile, the Commission recommends for continuing with
the present Discretionary Grants. However, such grants should be treated as income of the
benefiting public servants and liable to be taxed.
9.4
Foreign Service Entitlements
The objective of providing Foreign Service Entitlements is primarily to ensure that our diplomats
can live and represent our country abroad with dignity. The diplomats and home based staff
posted to Missions abroad are entitled to salary and other Foreign Service benefits in the form
of Foreign Allowance, Representational Grant, Children’s Education Allowance, Home Leave
54 of 115
Passage, Bereavement, Emergency Evacuation and Loss, Medical Treatment, Accommodation
and Furnishing, Utilities, Domestic Help, Transfer Grant, Transport of Personal Effects, and
Vehicle Hire and Mileage Claim.
A non-diplomatic civil servant posted abroad is eligible for the same allowances and other
benefits, except for the Representation Grant and domestic help. A local recruit in the Embassy/
Mission/Consulate is eligible for remuneration and other benefits as per the Foreign Service
Entitlement Rules and Regulations (FSERR).
The FSERR was revised in 1999 and incorporated in the BCSR 2002. The BCSR 2012 has a
provision for the FSERR to be reviewed periodically by the Ministry of Finance, Ministry of
Foreign Affairs and the RCSC. Meanwhile, a number of administrative issues have surfaced in
the implementation of the FSERR.
The Commission recommends the rationalization of the following in the FSERR:
i.
All pay and allowances of diplomats, non-diplomats and local recruits abroad
to be denominated in local currency of that country;
ii.
No revision of the Representational Grant (RG) while the need for accounting
of 50 percent of RG be done away with;
iii.
The rental ceiling issues be taken up with the Government on case by case basis
as this is not an allowance;
iv.
Invest in housing for staff of the Missions/Embassies/Consulates;
v.
Provide Children Education Allowances notwithstanding the place of schooling;
vi.
Leave Travel Passage by full fare economy or in lieu thereof a lumpsum
allowance;
vii.
With regard to Carriage of Personal Effects:
a.
A 20 feet container where there is no surface road connection or two
trucks for diplomats and one truck for others where there is road
connection; and
b.
Air/Surface charges for 250 kgs of personal effects for diplomats and 100
kgs of personal effects for others (excluding free baggage allowances).
In lieu of claims at actual for some of the allowances, the Commission recommends
monetization as per lumpsum provisions (Annexures 7 – 10).
The Commission further recommends the revision of Foreign Service Entitlement Rules and
Regulations with the incorporation of the above.
9.5
Travelling Allowance
The objective of Travel Allowances such as Daily Allowances for both in-country and excountry is to facilitate civil servants to travel if required by the job and to compensate them
55 of 115
adequately for travel expenses.
The expenditure trends of the recent past years clearly show that travel expenditures are
alarmingly high with some of the agencies and also as a percentage of the overall budget
provisions. The perception is growing that “table” tours are common and claims are based on
the outdated dholam and porter pony systems although not in actual use for the most part. It
is also reported that some civil servants in a few agencies make travel claims like any other
entitlement whether tours are undertaken or not. Such perceptions may not be true but if they
are, these practices should be done away with immediately through stringent control and
monitoring at the appropriate levels.
The expenditure of the Government towards travel has averaged Nu. 1.382 billion per annum
during the last four years, and this constituted over 18 percent of the total budget outlay for
salary and allowances. In FY 2012-13, the travel expenditure of the Ministry of Agriculture
and Forest (MoAF) was the highest at Nu. 252 million, which constituted 38 percent of their
pay and allowances. This was followed by the Ministry of Home and Cultural Affairs (MoHCA)
including the Royal Bhutan Police with an expenditure of Nu. 84 million. This excluded travel
expenditures of the same sectors at the Dzongkhag and Regional levels. At the Dzongkhag
level, travel budget on an average constituted about 20 percent of their pay and allowances.
The lower levels of travel expenditures at the Dzongkhags could be on account of the largest
contingents of employees being in the Education sector that do not travel that frequently, but
these were still higher than the national level travel expenses.
The Commission recommends that all travels, irrespective of funding, be scrutinized for
their purposes and necessity at the appropriate government machinery levels. The upward
revision in DA is further recommended to be met through rationalization of the overall
government expenditure on travel and for capping such travel expenses within 15 percent of
the pay bills. This could be further rationalized considering the experiences in the corporate
and private sectors.
9.5.1
Daily Allowance (DA) – In-country
The DA for travel within the country was last revised on 1st January 2000. While the cost of
living in the country has increased substantially since then, the DA has remained the same.
Table 9.7: Existing In-country DA
Sl. No. Position level
Daily Allowance
1
EX1/ES1 to EX3/ES3
Actual lodging in one room plus Nu. 500 or lumpsum
DA of Nu. 800
2
3
4
P1 to P5
S1 to S5
O1 and below
Lumpsum Nu. 500
Lumpsum Nu. 300
Lumpsum Nu. 150
56 of 115
Note:
1. The actual lodge charges shall be paid subject to production of original bills;
2. When lodge is provided, 50% of the lumpsum DA shall be paid to civil servants of
grade 4 & below; and
3. When both food and lodge are provided, 20% of the lumpsum DA shall be paid.
Full DA is paid only for the first 30 days of continuous halt on duty at one particular place.
After 30 days, only 50 percent of the DA is admissible for a maximum period of five subsequent
months. No DA is paid for continuous stay beyond 6 months.
The existing DA rates for travelling within the country are not sufficient to meet the travel
expenses of officials on tour. Inflations for food & restaurant and hotels have increased
since 2000 by 89 percent and 83 percent respectively. Based on some market surveys, hotel
room charges now cost at least Nu. 500 per night and a simple meal in standard hotels and
restaurants cost Nu. 200.
While noting the concerns of the high expenditures on travel and on inadmissible claims, the
Commission still recommends to increase Daily Allowances for in-country travel in view of
the increased costs of travel.
Table 9.8: Recommended In-country DA
Daily Allowance
1
Ministers, equivalent ranks, Constitutional office holders, Government
Secretaries and EX/ES-1 to EX/ES-3
Actual lodging in one room (maximum
of Nu. 3,000) plus Nu. 800 or lumpsum
DA of Nu. 1,500
2
P1 to P5
Lumpsum Nu. 1,000
3
S1 to S4
Lumpsum Nu. 750
4
O1 to O4 and below
Lumpsum Nu. 500
Note:
2. When lodge is provided, 50% of the lumpsum DA shall be paid to civil servants of
grade 4 & below; and
3. When both board and lodge are provided, 20% of the lumpsum DA shall be paid
for incidental expenses.
4. When food and lodge and out of pocket expense amount is provided, no DA shall
be paid.
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An official returning to duty station on the same day from site visits beyond 40 km shall be
eligible for half DA.
9.5.2
Daily Subsistence Allowance (DSA) in India
DSA in India was last revised from 1st July 2000.
Table 9.9: Existing DSA in India
State Capital
Other Places
1
EX1/ES1 to EX3/
ES3
Actual lodging for one room
plus DA of Nu. 1,500 or
lumpsum DA of Nu. 4,000
plus DA of Nu. 1,000 or lumpsum DA of Nu. 3,000
2
P1 to P2
plus DA of Nu. 1,000 or
lumpsum DA of Nu. 3,000
plus DA of Nu. 750 or lumpsum
DA of Nu. 2,000
3
P3 to P5
Lumpsum Nu. 2,500
Lumpsum Nu. 1,500
4
5
S1 to S5
O1 and below
Lumpsum Nu. 1,500
Lumpsum Nu. 1,000
Lumpsum Nu. 1,000
Lumpsum Nu. 800
Note:
2. Officials in grades 1,2 and 3 are entitled to 5 star hotels and officials in grades 4 and
5 are entitled to 3 star hotels;
3. The above rates are not applicable beyond 30 days. Officials requiring to stay beyond 30 days shall be required to find cheaper accommodation and the DSA and
lumpsum DSA shall be reduced to 50 percent;
4. When lodge is provided, 50% of the lumpsum DSA shall be paid to civil servants of
grade 6 and below; and
5. When both food and lodge are provided, 20% of the lumpsum DSA shall be paid.
The present DSA rates in India are not sufficient to meet the expenditures incurred by officials
travelling to India.
The Commission recommends to revise DSA rates in India considering the huge increases in
travel expenses mainly on account of inflation since the last revision.
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Table 9.10: Recommended DSA in India
Sl. No. Position Level
1
Ministers, equivalent ranks,
Constitutional office holders, Government Secretaries
and EX/ES-1 to
EX/ES-3
2
3
4
P1 to P5
S1 to S5
O1 to O4 and below
State Capitals
Actual one room lodging (maximum of Nu.
15,000) plus Nu. 2,800
or Lumpsum Nu. 7,500
Other Places
Actual one room lodging
(maximum of Nu. 10,000)
plus Nu. 2,000 or Lumpsum Nu. 5,500
Lumpsum Nu. 5,500
Lumpsum Nu. 3,500
Lumpsum Nu. 2,500
Lumpsum Nu. 3,500
Lumpsum Nu. 2,000
Lumpsum Nu. 1,500
Note:
2. Ministers, equivalent ranks, Constitutional office holders, Government Secretaries
and EX/ES-1 to EX/ES-3 are entitled to 5 star hotels;
3. The above rates are not applicable beyond 30 days. Officials requiring to stay beyond 30 days shall be required to find cheaper accommodation and the DA and
lumpsum DA shall be reduced to 50 percent;
4. When lodge is provided, 50% of the lumpsum DA shall be paid to civil servants;
and when both food and lodge are provided, 20% of the lumpsum DA shall be
paid.
5. When food or lodge and out of pocket expense amount is provided, no DSA shall
be paid.
9.5.3
Daily Subsistence Allowance (DSA) for Countries Other Than India (COTI)
The DSA rates for COTI were revised in September 2002 based on the UN’s DSA rates prevalent
at that point in time. Since, the cost of living in many cities around the world, especially in
Europe and the Americas, have increased substantially since then, the present DSA rates needs
revision.
The Commission recommends for revision of DSA rates for COTI as placed at Annexure 11.
At present, a civil servant on transit for 8 hours or more for the next flight while on travel
abroad is eligible for full DSA. The Commission recommends for full DSA on overnight basis.
A terminal allowance of USD 50 to cover airport transfers per halt except for transit is also
recommended.
The Commission further recommends that officials in EX1/ES1 and above be given the option
to claim actual room charge (maximum of twice the DSA of that country) and 50 percent DSA
or full DSA.
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9.5.4
Travel Allowance (TA)
The mileage rate for travelling within the country was last revised on 1st July 2007.
Table 9.11: Existing Mileage Rate
Existing TA (1st July 2007)
1
EX1/ES1-P5
Mileage for 4 wheeler vehicle @Nu. 14/km or bus fare as approved by the Government
2
S1-S4
Mileage for 2 wheeler vehicle @Nu. 4/km or bus fare as approved
by the Government
3
S5-O4
Bus fare as approved by the Government
Since the cost of transport has increased substantially due to hike in fuel prices and cost of
new vehicles, it is recommended to revise the mileage rates.
Table 9.12: Recommended Mileage
1
EX1/ES1-P5
2
S1-S5
3
O1 and below
Recommended TA
Mileage for 4 wheelers Nu. 16/km or bus fare as approved by
the Government
Mileage for 2 wheelers Nu. 6/km or bus fare as approved by the
Government
Bus fare as approved by the Government
In view of improved transport systems, the minimum travel distance for claiming mileage is
recommended to be increased from 10 km to 40 km from the duty station.
9.5.5
Porter and Pony Charges
Civil servants are eligible to claim Porter and Pony charges to meet transportation costs while
on tours or on transfer to places where there are no motorable roads. This was considered
when much of the rural areas and many of the Dzongkhags were not connected by motorable
roads.
Table 9.13: Existing entitlement of Porter and Pony
Sl.No.
1
2
3
Position Level
EX1/ES1 to EX3/ES3
P1 to P5
S1 to O4
Riding Pony with Syce
1
1
1
60 of 115
Porter
3
2
1
Table 9.14: Existing Porter and Pony Charge Rates
Sl. No.
Description
Rate per day (Nu.)
1
Riding pony with syce
450
2
Pack pony
300
3
Porter
150
Most of the Gewogs and villages are today connected by motorable roads. However, while
there is very limited need to use the porter and pony system for transportation, the civil servants
continue to claim porter and pony charges using the outdated dholam system as a basis.
The Commission recommends to do away with existing practice of porter/pony system
together with the Dholam system. This is recommended to be replaced by actual expenses as
may be incurred and verified depending on the nature of travel.
9.5.6
TA/DA of Local Community Leaders
Representatives of the Local Governments are eligible for TA/DA to attend DYT and when
required by the Dzongkhag to attend important government functions such as meetings,
workshops and trainings. They are not entitled to daily TA/DA for travels within their Gewog
for which Gups and Mangmis are paid annual lumpsum TA/DA allowance of Nu. 6,000 and
Nu. 4,500 respectively.
Table 9.15: Existing TA/DA of LG
Description
Gup
Mangmi
Geydrung
Tshogpa/Chipon
DA (Within the Dzongkhag)
Nu. 500
Nu. 300
Nu. 300
Nu. 150
TA on non-motorable route
per day or actual bus fare
on motorable routes
Nu. 250
Nu. 250
Nu. 250
Nu. 250
Actual bus
fare
Actual bus
fare
Actual bus
fare
Actual bus fare
Mileage
Considering increases in costs and inflation, the Commission recommends for revision of the
TA/DA for the LG functionaries while travelling outside their Gewogs. It is also recommended
to revise the lumpsum TA/DA allowances for the Gups and the Mangmis for travel within
their Gewogs.
61 of 115
Table 9.16: Recommended TA/DA of LG
Description (In Nu.)
Gup
Mangmi
Gedrung Tshogpa
DA within Bhutan outside
Nu. 750
Nu. 500
Nu. 500 Nu. 300
of Gewog)
TA on non-motorable route
per day or actual bus fare
Nu. 250
Nu. 250
Nu. 250 Nu. 250
on motorable routes
1. For travel outside Bhutan, the allowances will be at par with Supervisory Level
of the civil service.
2. For travel within Gewog for monitoring plan activities, the lumpsum amount
has been raised from Nu. 6,000 to Nu. 18,000 per annum for Gups and for
Mangmis from Nu. 4,500 to Nu. 13,500 per annum.
9.5.7
Carriage charge of personal effects
The carriage charge of personal effects is provided to civil servants while on transfer and
retirement. The existing carriage charge was revised in 2000. If vehicles are arranged by office
for transportation of personal effects, the hire charges shall not be admissible.
Table 9.17: Carriage charge of personal effects
Sl. No.
Grade level
Quantity
1
1 to 3
2 trucks
2
4 to 8
1 truck
3
9 and below
1 DCM or equivalent
Rate
As per
RSTA
Amount
Nu. 55,000
Nu. 27,000
Nu. 15,000
The requirement by BSCR 2012 for a civil servant to get transferred after every five year
is resulting in huge financial implications to the Government. While regular transfers are
desirable for certain professions or positions, in order to reduce financial burden on the
Government, the periodic transfer needs thorough review for certain categories of employees.
Although it has been 14 years since the last revision, no revision is recommended as the
existing rate and scale adequately covers the transportation cost of personal effects.
9.6
Tax Free Vehicle Quota for Public Servants
The system of providing foreign vehicle quota was introduced in 1980s, at a time when public
transport, buses and taxis were almost non-existent. The main objective was to facilitate the
import of foreign vehicles by public servants and to minimize the pressure on limited number
of government pool vehicles. It was also aimed at easing the mobility of the public servants
while conducting their official duty and to standardize the import of the foreign vehicles in
the country.
62 of 115
Civil servants in P3 level and above and other senior public servants are provided import duty
exemption vehicle quota once every seven years. In 2009, the tax exemption ceiling was fixed
at Nu. 800,000 to discourage the import of high valued vehicles and its corresponding impact
on the foreign reserves. Import values of vehicles exceeding the ceiling were made liable to
pay tax at the prevailing tax rates.
Table 9.18: Number of Tax Free Vehicle Quotas
Quota Issued
COTI* India
Total
2000
141
141
2001
144
144
2002
215
215
2003
256
256
2004
212
212
2005
236
236
2006
225
225
2007
561
561
2008
507
28
535
2009
372
7
379
2010
708
25
733
2011
793
4
797
2012
247
247
TOTAL
4,617
64
4,681
* COTI – Countries Other Than India
Year
Quota Used/Imported
COTI India Total
124
124
131
131
181
181
241
241
204
204
214
214
186
186
384
384
390
23
413
274
4
278
376
5
381
147
1
148
91
91
2,943 33
2,976
Quota not Used
COTI India Total
17
17
13
13
34
34
15
15
8
8
22
22
39
39
177
177
117
5
122
98
3
101
332
20
352
646
3
649
156
156
1,674 31 1,705
Although 4,681 quotas were issued in the last 13 years (2000-2012), only about 2,976 quotas
were used to import vehicles. Of the total, about 43 percent were issued prior to introduction
of tax exemption ceiling and all the vehicles were imported from third countries. With rapid
growth in the number of civil and other public servants, and with the implementation of
Position Classification System (PCS), there has been corresponding increase in the issuance
of quota. In the last five years, on an average about 538 quotas were issued annually which
is about 50 to 60 percent of third country annual vehicle import. In 2012, due to the Indian
Rupee shortage in the economy, the Government suspended quota issuance as part of its
measures to reduce imports. Even after its suspension, the Ministry of Finance received around
410 quota applications by the end of December 2013.
Financial Cost of Vehicle Quota to the Government
The provision of duty exemption vehicle quota to the civil and public servants has had
significant financial implication to the government in terms of tax revenue forgone. A simple
calculation of the revenue losses through exemption for 1,311 vehicles imported from 2008 to
63 of 115
2012 is estimated at Nu. 423.960 million. Furthermore, the imports also depleted the reserves
by about USD 41.757 million, which is about 1.5 times the annual interest payments made
by the government to the international financial institutions and other bilateral development
partners. The average tax revenue foregone per imported vehicle is estimated at Nu. 0.344
million and it also has other consequential impacts on import of fuel and spare parts.
Table 9.19: Financial Cost of Vehicle Quota
Description
2008
2009
2010
2011
2012
Total
Number of Quota Issued
535
379
733
797
247
2,691
Number of Quota Used/
413
278
381
148
91
1,311
vehicles imported
Quota Balance/Not Used
122
101
352
649
156
1,380
Ceiling on Quota (In. Nu.)
800,000 800,000 800,000 800,000 800,000
Tax on Third Country Vehicle
35%
35%
45%
45%
55%
Tax on India Origin Vehicle
15%
15%
20%
20%
20%
Exemption on Third Country
0.280
0.280
0.360
0.360
0.440
Vehicle
Foregone Revenue (Nu. in
115.640 77.840 137.160 53.280 40.040 423.960
millions)
Reserve Used (in million
13.155
8.855
12.135
4.714
2.899
41.757
USD)
It is common knowledge that most of the civil and public servants sell their vehicle import
quota to private individuals due to lack of equity financing. As a result, the selling of quota
has had multiplier impact on the import of vehicles. The private individual who has purchased
the quota imports a vehicle from a third country while the public servant who has sold the
quota uses the proceeds of the quota to purchase cheaper vehicles. This has led to import of
two vehicles under a single quota, which increased the vehicle imports in the past decade.
Consequently, the imports relating to fuels, spare parts and car accessories have increased
tremendously, further impacting convertible and Indian rupee reserves.
The vehicle quota was introduced with noble intentions but the results were anything but
what was expected. Despite vehicle quotas being issued, the pool vehicle system flourished.
Over the years, the abuse of vehicle quota systems negatively impacted revenues to the
Government, increased number of vehicles that were imported further straining foreign
reserves, and consequentially imports of spares and petroleum products increased.
Since in any case, the vehicle quota system has evolved into an entitlement that enhances the
income of those who sell the quotas, the Commission recommends that the vehicle quota
system be discontinued and in lieu thereof lumpsum financial incentives be provided.
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Basis and Recommendation for lumpsum incentives
A detailed analysis suggests that the Government would benefit by providing cash compensation
in lieu of current tax exemption ceiling of Nu. 0.800 million, as the government could earn tax
revenue of Nu. 0.440 million per vehicle, from third country vehicle imports as per current
the trends. In lieu of current quota, if the government were to provide a lumpsum financial
incentive equivalent to 20 percent tax on the Indian origin cars (Nu. 0.160 million), the net
gain to the Government would be around Nu. 0.280 million per vehicle if imported from third
countries. Even otherwise, other benefits such as protection of reserves, reduction in import
of fuel and car accessories, reduction in traffic congestion, and reduction in environmental
pollution would accrue to the country as a whole. As the period for entitlement quotas is
once every 7 years, the lumpsum amount is recommended to be granted to the entitled civil
servants every 7 years.
With the recommended monetization, the financial implication of the cash incentives for
the 1,705 unused quota and 410 pending quotas will be about Nu. 338.400 million. The
annual cost implications to the Government for those civil and public servants for whom the
quotas would become due is projected at Nu. 116.800 million. With the implementation of
the recommendation, all quotas that have not been used should be allowed to be monetized
within a set time frame beyond which the quotas would become invalid. This scheme should
be applied across the board for all public servants; and this would entail the amendment of
some of the provisions of the Parliamentary Entitlement Act 2008 and the Judicial Services Act
2007.
Table 9.20: Projection on Vehicle Quota, Financial Implication and Net Savings
Description
Eligible Public
Servants
Average Annual
Entry in P3 &
Level
Quota Eligibility every after 7
years
Foregone Revenue at Existing
at Ceiling (Nu.
in millions)
Cash Compensation (Nu. in
millions)
2000-2013
Balance
2014
Proj.
2015
Proj.
2016
Proj.
2017
Proj.
2018
Proj.
Total
2,115
730
730
730
730
730
5,765
500
500
500
500
500
2,500
230
230
230
230
230
1,150
930.60
321.20
321.20
321.20 321.20 321.20 2,536.60
338.40
116.80
116.800
116.80 116.80 116.80
65 of 115
922.40
Net Saving (Nu.
in millions)
Net Saving
(USD in millions)
592.20
204.40
204.40
9.62
3.32
3.17
204.40 204.40 204.40 1,614.20
3.03
2.90
2.77
24.83
The Commission therefore recommends a time-bound monetization of all unused vehicles
quotas and a lumpsum financial incentive of Nu. 160,000 in lieu of vehicle quotas as and
when the quotas become due.
While the Holders, Members and Commissioners of the Constitutional Bodies are entitled
for chauffer driven duty cars, there is no mention of duty free vehicle quota under their
Service Entitlements Act. The Commission recommends that the Holders, Members and
Commissioners of the Constitutional bodies also be entitled to a lumpsum grant of Nu.
160,000 for each term.
Since the Cabinet Ministers and equivalent post holders as well as Dzongdags are entitled
for designated duty vehicles, they will not be entitled to this lumpsum incentive.
9.7
Non-Monetary Benefits (NMBs)
The use of NMBs can complement pay and allowances and thus help to attract, retain and
motivate people. Therefore, the government should try and introduce such benefits from time
to time. As the private sector looks up to the government as a model employer and seeks to
emulate what it does, good practices can have positive impact beyond the public sector.
Today, one area where public servants face challenges is in raising a family. Women in
particular face a sacrificial choice between career and family, but this should not have to be
the case since the outcome of such choices could negatively impact the overall development
prospects of the country. We need families to raise the future citizens of Bhutan as much as we
need all hands on deck to secure our future as well as that of our children. Therefore, policies
that help to reduce such dilemmas are important.
In that direction, the Commission recommends that paid paternity leave be extended to 15
working days and paid maternity leave be extended to 6 months for every childbirth. In the
event of miscarriages, 5 days paid leave is recommended for the couple to recuperate from
the physical and psychological trauma.
Further, one of the greatest challenges for parents who work in offices is caring for their young
children until they attain school going age. This is a challenge that is expected to grow as
both husband and wife going to office becomes the norm. To address this challenge, which
will also reduce stress and costs on parents, it is recommended that offices, based on critical
mass, provide a space to be used as a crèche for parents to be able to keep and look after
their children. It is also recommended, given the growing problem of raising a young family,
that the government explore the possibility of subsidizing and establishing day-care centers
for public servants as well as giving tax exemptions for such expenditures.
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Also, both as an activity to promote healthy lifestyle (and thus reduce healthcare costs for the
exchequer) as well as to promote bonding and team building within the public service, it is
recommended that appropriate annual budget provisions be kept for participating in team
sports tournaments such as archery, khuru, football, basketball, volleyball, cricket, etc. from
the overall current budget they are provided.
It is recommended that appropriate rules and regulations be framed by the relevant
authorities to incorporate these NMBs.
67 of 115
10 GOVERNMENT
VEHICLE
10 POOL
GOVERNMENT
POOL VEHICLE
Background
The Government Pool Vehicle3 System was introduced for efficient and effective delivery of
public service through enhanced mobility. All government ministries and agencies are allotted
certain numbers of pool vehicles to be used for official purposes. The Government has also
laid out regulations4 governing the pool vehicles usage. Senior officials such as Prime Minister,
Cabinet Minister, and Holders, Members and Commissioners of Constitutional Offices, Cabinet
Secretary, Government Secretaries, Commission Secretaries, Joint Secretaries, Attorney
General and Secretary General of National Assembly and National Council, and Dzongdags,
Thrompons, Members of Privy Council and Dzongkhag Drangpons are entitled and provided
with a designated duty vehicle along with a driver. In addition to designated vehicles, based
on the requirements and functionalities, the various agencies of the government are provided
common pool vehicles.
The number of pool vehicles in the Government has increased over the years with expansion of
public offices especially in the last 5 to 6 years during the transition to democratic constitutional
monarchy system. There were at least 960 vehicles in the Government at the beginning of 10th
FYP (2008) excluding vehicles under the Royal Bhutan Police and two wheelers. In 2013, the
total number of vehicles in the Government was 1,484. The number of pool vehicles increased
by 11 percent annually on an average in last decade and highest growth was observed in 2008
at 21 percent.
Of these 1,484 government pool vehicles; 441 are special purpose vehicles that include
ambulances, buses, protocol duty cars, trucks and DCM and other utility vehicles; 111 are
designated vehicles (DV) for senior government officials; and the balance 932 vehicles are
with various agencies as common pool vehicles (CPV). Of these pool vehicles, 33 percent
were procured prior to 2003 and about 47 percent within last six years. In terms of distribution
by location, around 57 percent (530 vehicles) are in Thimphu followed by Paro (5.9 percent),
Trashigang (5 percent), Samdrup Jongkhar (4.5 percent), Bumthang (3.3 percent), abroad (1.5
percent) and the rest in other Dzongkhags. Of the 932 CPVs, 440 CPVs are located in Thimphu.
3.The government pool vehicles includes vehicles used by government agencies including constitutional bodies, judiciary, and but excludes RBP & government owned corporations. It also excludes two wheelers.
4.Rules on the Use of Pool Vehicles, 2000 & 2001.
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Table 10.1: Number and Recurrent Cost of Pool Vehicles
Description Number of Pool Vehicles*
Recurrent Cost
Maintenance**
Driver’s Remuneration/Operating Cost
Salary
Salary Allowance
LTC
LE
PF
Retirement
Travel
Overtime
Unit Recurrent Cost
Vehicle Rental
2008/09
Actual
10th FYP
2009/10
2010/11
Actual
Actual
Budget
2011/12 2012/13 2013/14
Actual Revised Budget
960
1,112
1,224
1,383
1,453
1,484
337.056
204.734
418.899
235.928
467.704
264.240
560.819 620.091 582.757
295.923 341.269 292.420
132.322
182.971
203.464
264.896 278.822 290.337
68.287
5.691
5.691
7.512
1.366
21.600
22.176
0.351
11.775
80.681
26.610
6.723
6.723
8.875
1.614
25.020
26.726
0.377
9.969
112.987
9.416
9.416
12.429
2.260
27.540
29.417
0.382
12.441
130.218 139.545 145.373
21.795
19.868 20.292
10.852
11.629 12.114
10.852
11.629 12.114
14.324
15.350 15.991
2.604
2.791
2.907
31.118
32.693 33.390
43.135
45.318 48.155
0.406
0.427
0.393
21.786
13.321 18.277
*Excludes two wheeler; **Vehicle maintenance expenditure in FY 2013-14 excludes RBP
vehicles.
The total recurrent cost on vehicles for the 10th FYP was Nu. 2.405 billion (Nu. 1.342 billion
for maintenance and Nu. 1.062 billion for operations). The share of recurrent cost of pool
vehicles was about 3 percent of total current expenditure in the 10th FYP. While the share to
total recurrent expenditure was maintained at 3 percent, the absolute amount has increased
by 75 percent during the 10th FYP as compared to the 9th FYP. The same share is maintained
for the FY 2013-14 and is budgeted at Nu. 582.75 million excluding cost related to rental and
purchase of new vehicles. The unit recurrent cost for a vehicle has been increasing annually
an averaged about Nu. 0.393 million during the 10th FYP. The pool vehicle system therefore
does have a huge financial burden on the exchequer.
Although pool vehicles facilitate effective and efficient service delivery, it is also subject to
misuse, which is the general perception of the public. Within the public servants, it is viewed
as discriminatory as it has become more like a designated vehicle for the senior officers and
its limited access to lower level civil servants. The Commission reviewed the existing system
and explored the possibility of replacing it with a suitable alternative.
The Commission explored several options (some of which had already been tried but failed
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such as centralization, and strict enforcement of rules) and recommends that a more radical
but targeted approach be adopted, which is to withdraw all pool vehicles. A simple cost benefit
analysis on withdrawal of 932 common pool vehicles yield an annual financial benefit of Nu.
378.897 million from recurrent costs. Any new arrangement would also have the benefit of
drastically reducing, if not eliminating, the misuse of pool vehicles with the corresponding
savings.
The Commission therefore recommends the total withdrawal of the 932 common pool vehicles
(CPV) from the various agencies. Designated vehicles are recommended to be provided only
for the PM, Chief Justice of Bhutan, Cabinet Ministers, Speaker of NA, Chairperson of NC,
OL, Chairperson of Privy Council and Dzongdags. The vehicles designated to the 75 other
senior public servants are recommended to be withdrawn, and in lieu thereof provide them
with the onetime lumpsum conveyance grant of Nu. 700,000 similar to the MPs with the
driver and fuel allowances.
This will help in reducing the number of pool vehicles from 1,484 to 448, thereby reducing
the recurrent and capital cost of vehicles in annual budget. The provision of a grant instead of
designated vehicles to the 75 other entitled senior officials for designated vehicles would bring
cost savings to the Government through reduction of recurrent and capital cost of vehicles.
Table 10.2: Replacement of Designated Pool Vehicles by Allowances (in Nu.)
Description
Number
One time
Allowance
Financial Implication
(4 Years)
75
30,487,405.87
121,949,623
Cost of Existing System
Total Recurrent Cost
Total Cost of New Proposal (LCG)
134,165,554
Lumpsum Amount Per Designated
Pool Vehicle
75
700,000
52,500,000
Lumpsum Vehicle Quota
75
160,000
12,000,000
Vehicle Maintenance Allowance for
4 years
75
6,300,000
25,200,000
Driver Allowance for 4 years
75
5,400,000
21,600,000
Hire Charge (20% of 75 DV)
75
5,716,388.6
22,865,554
75
75,000,000
75,000,000
Plus Sale Proceeds @ Nu. 1.0 million/
vehicle
Net Financial Gain (4 yrs)
62,784,069.06
In order for this initiative to be effective, it is very important that the Government make no
exception for any category of officials.
70 of 115
The withdrawal of the pool vehicles should be undertaken in a phased manner for which a
proper Business Plan would have to be endorsed by the Government. The government should
initially withdraw all pool vehicles in Thimphu and establish a corporation that will manage
the government vehicles. The government should transfer all pool vehicles along with the
drivers to the newly established corporate body and this corporate body should be able to
sustain itself through renting of vehicles to the government as and when it is required. Over
time, the government should withdraw the pool vehicles of other Dzongkhags and bring the
management under this corporate body. Similar system could be replicated for SOEs.
The Commission further recommends that the old vehicles be auctioned either before handing
over to the corporate body to be set up or the corporate body should take such decisions
based on financial viability. The drivers of these vehicles should be given preference to be
employed in various large projects of the Government to protect their livelihood. Special
care should be taken to ensure that drivers living in government quarters are allowed to
continue even after their transfer to the corporation.
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11 Post service benefits
11 Post service benefits
11.1 Public Service Pension Benefit
11.1.1 Introduction
The Government set up the National Pension and Provident Fund Plan considering that pension
benefits would be crucial to the well-being of civil servants and their families. The Plan is
a two tiered partially funded pay-as-you-go system fully guaranteed by the Government. It
comprises of a Pension Plan and a Provident Fund Plan. The objectives of the Government in
designing the retirement schemes are as under:

Make the public service attractive

Retain qualified, competent and efficient public servants

Look at civil service as long-term career

Help establish a clean government by curbing corruption and promoting
professionalism

Reward civil servants for their dedication and loyalty

Help civil servants retire with security and dignity
11.1.2 Pension benefit payout and benefit level
Pension benefits are paid on the final salary defined by a formula.
Table 11.1: Pension Formula
Parameters
Civil Service
Armed Forces
Benefit level
40% of final salary
45% of 12 months average
salary
Benefit Formula
40% X final salary X No. of Years of
Contributory service divided by 30
years
45% X Average of final 12
months’ salary X No. of
Years of Contributory service
divided by 27 years
Minimum contribution years
10 years
10 years
Contribution rate
16% of salary
15% of salary
Other benefits
Disability, Spouse, children, orphan,
dependent parent
Disability, Spouse, children,
orphan, dependent parent
Currently, the Pension Plan has 3,960 pensioners representing 8.08 percent of total contributing
members of 48,996. Since the inception of the Plan, the NPPF has disbursed a total pension
benefit of Nu. 723.04 million. The Pension Plan is a partially funded since the contribution
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rate is only 16 percent of basic salary against the required contribution rate of 35 percent
if the Plan has to be financed on a fully funded basis. The existing contribution rates and
accumulated assets are therefore not adequate to finance the future pension obligations.
Table 11.2: Gross Benefit Level of Post-retirement Income Security
NPPF
Position Level
Employer
Total
Pension
Provident
Fund
Gratuity
EX/ES1
40%
10%
14%
64%
P1
40%
10%
24%
74%
S1
40%
10%
24%
74%
O1
40%
10%
24%
74%
Weightage
56%
14%
30%
100%
11.1.3 Impact of pay consolidation or pay revision
The existing Civil Pension Plan is paid at 40 percent of final salary and the pension benefit
is adjusted to annual inflation or 5 percent p.a. whichever is lower to protect the purchasing
power of the pensioners. The maximum pension is currently fixed at 40 percent of the
maximum pay scale of EX1 of the civil service.
Table 11.3: Pension benefit level due to pay revision
Position Level
Average basic pay
Pension Benefit level
Existing
Current pension
After pay revision
EX1/ES1
52,723
21,089
29,056
P1
29,435
11,774
16,222
S1
15,293
6,117
8,428
O1
10,395
4,158
5,729
11.1.4 Cost of pay revision on the sustainability
Since the pension benefits are paid on the final salary, the pay revision in the civil service
will affect the sustainability of the Plan. It is anticipated that the sustainability of the Pension
Plan will reduce but only marginally considering the overall additional contributions from the
higher basic pays.
73 of 115
Figure 11.1: Current balance (inflow minus outflow)
As the current population is young, the Plan has enough assets to finance the additional
pension benefits. The Government therefore would not have to finance the shortfall amount
for now. Projections show that the depletion of fund will start after 2033 with the outflows
exceeding inflows, for which NPPF would have to initiate reform measures from time to time
to ensure that the deficit is maintained at a minimum level.
11.2 Measures to Enhance the Sustainability of Pension Plan
The Commission recommends the following measures in order to minimize the impact of pay
increase on the sustainability of the Pension Plan and the liabilities that could accrue to the
government in future.
11.2.1 Reconsideration of Pension Formula based on 24 months average salary
It is recommended that the pension formula and pension payments be based on the “average
of the last 24 months basic salary” instead of “last salary”. This is proposed since the pension
benefit based on final salary is highly sensitive to the pay revision.
As per the First Pay Commission’s recommendation, the pension benefit formula was to be
computed at 40 percent of the final 24 months average salary. This was recommended to avoid
sudden increase in benefit level since it is pegged to the last salary. However, while adopting
the recommendations of the First Pay Commission, the Lhengye Zhungtshog had endorsed
the pension benefit formula computed at 40 percent of final salary contrary to the 24 months
average salary recommended by the Pay Commission. Therefore, in 2010, NPPF adopted the
revised pension formula with benefit level fixed at 40 percent of final basic salary along with
the increase of the contribution rate to 22 percent (employee 11 percent and employer 11
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percent) of basic salary after civil service pay revision of 2010.
11.2.2 Suspension of pension on re-employment
The Pension Plan was instituted in 2002 with the primary objective to provide income security
after retirement. However, under the existing pension plan, pension benefits are paid even
if members are gainfully employed. These re-employed officials not only receive pay, but
also pension benefits and monthly contribution of 11 percent from the Government. Such a
practice is not only against the principles of pension, but would also have adverse impact on
the sustainability of the pension system calling for a huge subsidy from the Government to
meet future pension obligations. Currently, there are 34 pensioners re-employed in various
sectors of the civil and public services but the numbers are expected to increase over the
years.
To rationalize the allocation of public resources and to reduce incidence of inter-generational
burden as well as to avoid creation of moral hazard in the overall post-retirement system, the
Commission recommends that pension for those re-employed in the civil and public service
be immediately suspended.
11.2.3 National voluntary savings scheme
A National Savings Scheme (NSS) is proposed to be introduced to inculcate savings culture
among the public servants. For participating in the scheme, the Commission recommends all
public servants to voluntary contribute up to 5 percent of the basic salary for a minimum
period of 5 years, which shall be tax exempted. The upper limit on the number of years that
this scheme could be in place may be reviewed every 5 years. The NSS could be implemented
by NPPF or any other financial institutions that offers high returns. Such an arrangement will
provide predictable deposit base for the financial institutions to invest in long term projects
besides helping the civil servants to save for the future. The scheme could be extended to the
employees of the corporate and private sectors as well as to the public at large given the need
to promote savings and investments.
11.2.4 Home Ownership Program for the members
As per the National Housing Policy, NHDC is mandated to provide affordable housing to the
civil servants by increasing housing stock and promoting home ownership. The NPPF has also
made significant moves towards achieving this mandate.
However, challenges in achieving this mandate include non-availability of land and lack of
necessary infrastructure facilities such as access to the land, water and power supply. More
importantly, lack of financing has been a major challenge. In this regard, the Commission
recommends that the Government provide subsidies in the form of low interest rates on loans
and allocation of government land free of cost to ‘society-type’ groupings of low income civil
servants. The Commission also recommends that the government explore the opportunity for
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NPPF, NHDC and NLC to work together to increase supply of low income housing beginning
with the areas where the shortage is most severe. For other groups, public-private partnership
is recommended in increasing housing stock and to promote home ownership.
11.3 Gratuity
To recognize and reward civil servants for their long service to the country, civil servants are
entitled to gratuity after a minimum of 10 years of service or upon death, except those on
contract. The amount is computed based on last basic pay times the number of completed
years in service, subject to a maximum of Nu. 900,000. This ceiling was last revised in 2009.
Gratuity constitutes an important part of the pay, allowances and benefit packages for the
public servants as it helps them make their transition out of the public service.
Given its importance, the Commission revisited the gratuity ceiling and reviewed its impact.
The Commission finds that the current gratuity ceiling of Nu. 900,000 only affects people who
serve more than 30 years and have reached the EX3 level and above. Therefore, if this is not
revised following the revision in the pay, then it will also affect people down to the P2 level.
For others, with consolidation of current lumpsum salary allowance at 15 percent on existing
salary and 20 percent revision after consolidation, the gratuity of the employees within the
maximum ceiling will increase by 38 percent. On the other hand, the Commission finds that
the group of people who will be affected by this ceiling are a small number of people who
make up the senior bureaucrats at EX/ES-2 level and above.
It is recommended that the maximum gratuity ceiling be enhanced to Nu. 1.500 million.
Further, unlike other post service benefits like pension, the Commission recommends that
minimum vesting period of 10 years for gratuity be done away with so that people are
entitled to it right after the completion of probation period. Further, it is recommended that
the same ceiling be applied to all other public servants.
11.4 Early Retirement Scheme (ERS)
The Early Retirement Scheme was introduced in the early 2000s to compensate civil servants
opting to retire before their superannuation age. Nevertheless, not many civil servants have
availed this scheme as it was not considered very attractive, and opportunities outside of the
civil service are also not very good.
Table 11.4: Existing ERS
Age Limit
ERS Benefits
Age 51 years and above
3 months’ salary for every remaining year of service
subject to maximum of 15 months’ salary
Age below 51 years
One months’ basic salary multiplied by the remaining
years of service to superannuation subject to a maximum of 12 months
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In order to provide fair compensation and to encourage voluntary retirement and to meet the
intended objective of the Government, the Commission recommends to enhance the benefit
levels of the ERS.
Table 11.5: Recommended ERS
Age Limit
ERS Benefits
Age 51 years and above
3 months’ salary for every remaining year of service subject to
maximum of 18months’ salary
Age below 51 years
2months’ basic salary multiplied by the remaining years of
service to superannuation subject to a maximum of 18 months
11.5
Special Retirement Scheme (SRS)
To enhance efficiency and performance in the civil service, as provisioned in the BCSR 2012,
periodic special retirement scheme (SRS) are to be implemented to right size and to address
redundant employees. While implementing the scheme, there will be a cost for the government
at the beginning, which gets compensated through financial savings in the long term.
To bring fair compensation for those identified by respective agencies and competent
authorities for SRS, there is a need to be fairly paid for his/her services rendered and to be at
least given a fair level of financial security after retirement.
The Commission recommends implementation of SRS to right size the civil service from time
to time for which specific schemes would have to be considered based on why the SRS was
necessary at that period of time.
11.6 Group Insurance Scheme (GIS)
The Group Insurance Scheme was introduced in 1987 by the Royal Insurance Corporation
Limited (RICB) for civil servants, and employees of autonomous and corporate bodies. The
Group Saving Cum Insurance is a low cost contributory and self-financing scheme giving
twin benefits: (i) an insurance cover to help their families in the event of death or permanent
total disablement while in service; and (ii) a lumpsum payment of the accumulated savings
with interest to the employee or to their families on cessation of employment on account
of retirement, resignation, death or permanent total disablement. The existing grouping of
members for subscription rate and insurance coverage is based on employees’ position level.
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Table 11.6: Existing GIS
Group
Position level
Subscription Rate/Month
Insurance Coverage
Group- A
EX/ES 1 to 3
300
300,000
Group- B
P1 to P5
200
200,000
Group-C
S1 and below
100
100,000
Apart from insurance, the 60 percent of the contribution is directly credited to saving fund
and accumulated saving is paid at the time of superannuation or cessation of service with an
interest of 7.5 per annum. Excluding the insurance, the average payment is about 65 percent
of the total contribution. Despite the numerous revisions of salary of the public servants, the
scheme has not been revised since the introduction.
The scheme has benefited employees both in terms of insurance during the accident and
savings at time of retirement. Given the low level of contribution, the accumulation of savings
and insurance benefits are also minimal. Moreover, the subscription rate, which was 3-9
percent of monthly pay scale of 1987, and currently works out to less than 1-2 percent of the
2010 pay scale.
Since the present level of contribution for insurance and saving has been in place for over
27 years, it is recommended that the new grouping for civil servants be proposed as per the
position classification and the level of contribution increased by 67 percent at EX/ES level and
100-200 percent at P1-O4. This constitutes about 1-2 percent of the new pay scale.
Table 11.7: Recommended GIS
Subscription Rate/Month
Insurance
Coverage
EX/ES 1 to 3
500
500,000
Group- B
P1 to P5
400
400,000
Group- C
S1 and S5
300
300,000
Group- D
O1 to O4
200
200,000
Group
Position level
Group- A
The insurance companies have agreed to the increased insurance coverage with the increased
premium and also adding a group to include O-level under the PCS of RCSC.
The new subscription and insurance coverage is recommended for all civil and public servants
for which the details would have to be worked out with the insurance providers.
78 of 115
12 Implication
corporateand
and other
12 Implication
on on
corporate
othersectors
sectors
12.1 Background
The remuneration package of the corporate sector is generally segregated into a) pay scale and
levels; b) allowances and other service benefits; and c) performance based incentives.
In general, the pay scales of the regular corporate employees are about 15 percent higher
than that of civil service. However, based on the size of the corporation and its profitability,
the allowances tend to vary across corporations. The corporations are categorized into three
groups – small, medium and large – and top positions of the corporate are equated to positions
above P1 level in the civil service.
12.2 SOEs under Ministry of Finance (MoF)
The corporate salary structures evolved from the civil service salary structures with additional
corporate allowances. The corporate allowances for SOEs under MoF such as BDBL, Bhutan
Post, BBS, Kuensel, FCB, and BAIL have been revised to 20 percent of the basic pay. Further,
depending on the company’s performance, annual bonuses are also paid. Most of the
SOEs under the MoF are commercially not viable but exist in order to fulfill specific social
objectives. Therefore, some of these companies still continue to receive financial support from
the Government. The salary structure of SOEs under MoF is given at Annexure 12.
Except for officers at Grade 1 for BDBL and NPPF, all the SOEs under MoF have the same
pay scales. The pay scales and allowances of the CEOs/MDs however vary from company to
company as placed at Annexure 13.
12.3 Druk Holding & Investments (DHI)
DHI has its own pay scales based on the contractual nature of the appointment of its employees.
DHI’s salary and allowances structure has three levels: professional/corporate, operational,
and wage services as placed at Annexure 14. The compression ratio between the Director
and Driver is about 6.4 excluding the allowances. The wage service employees such as the
messenger, security guard and sweeper are paid Nu. 180 per day, which is above the national
minimum wage.
Although employees are recruited on contract basis for an initial period of three years, the pay
scales have provisioned annual increments of 5 percent over a 20-year period. The higher pay
scales than most of the other corporate bodies in Bhutan adopted by DHI are most probably
due to the short contract tenures of three years and the high competition in the market for
similar expertise.
The DHI Remuneration Guidelines that forms part of the Royal Charter that created DHI
empowers the DHI Board to determine the remuneration of the CEO and employees of DHI.
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12.4 DHI Owned Companies (DOCs)
When the first corporations were curved out of the civil service such as the Chhukha Hydro
Power Corporation Ltd, the Government then had agreed that corporate salary structures be
kept at about 45 percent above that of the civil service, and those delinked from the civil
service would be entitled to other benefits such as bonuses. The pay scale differentials slowly
dwindled to 30 percent and today the differentials are down to about 15 percent. Apart from
the regular salaries, corporations are entitled to other benefits such as bonuses although such
benefits are now tied to performance for which targets are agreed upfront at the beginning of
the year.
The compression ratio for the DOCs between level 1 (highest regular) and lowest level is 6.4
without considering the allowances. The higher salary structure of DHI has not cascaded
down to the DOCs. The salary structures of the DOCs is given at Annexure 15.
The CEOs/MDs are selected through open selection processes. The terms and conditions of
the appointment of CEOs/MDs differ based on the terms of reference of appointment and the
tenures. CEOs/MDs are generally being appointed on contract for periods of 3-5 years. The
basic salary scales of the CEOs/MDs of DOCs and the CEO and Chairperson of DHI is placed
at Annexure 16.
12.5 Spiraling Effect of Public Service Salary Revision on Corporate Sector
12.5.1 Effect on SOEs under MoF
The total pay and allowances of Nu. 478.530 million for the SOEs constitutes about 16 percent
of their gross revenues. Considering the pay and allowances of SOEs are kept at 15 percent
higher than the civil servants, the proposed increase of civil servants’ pay and allowances will
translate into about 15 percent rise in corporate pay and allowances, which is estimated at
Nu. 71.78 million.
Considering their performance and expenditure growth in past five years, the gross revenue
of SOEs will be sufficient to meet the 15 percent increase in their pay and allowances except
for the Wood Craft Center, Bhutan Post and BBSC. The SOEs under MoF will have to meet
any salary revisions through gains in efficiency and reduction in other operating costs as the
Government may not provide any funds for meeting the salary revision cost.
Table 12.1: Spiraling Effect on SOEs (Nu. in millions)
Expenditure
#
SOEs
Gross
Turnover
1
Baseline
2012
2
PBT
CIT
PAT
Div.
to
Govt.
Rev.
to
Govt.
Subsidy
Cash/
In
-kind
Tax Exemption
Total
Other
Expdn
Pay &
Allc.
Travel
2,915.39
2,558.35
478.53
46.54
357.04
35.58
321.47
8.25
43.83
12.71
71.59
84.30
Proj.
2013
3,433.62
3,057.64
550.31
53.05
375.97
38.46
351.70
14.80
53.25
6.36
95.36
101.72
Difference
518.22
499.29
71.78
6.51
18.93
2.88
30.24
6.55
9.43
6.35
(23.77)
(17.42)
80 of 115
12.5.2 Effect on DHI and DOCs
With the revision of civil servants pay and allowances, it is possible that employees of DHI
and DOCs will also demand similar wage increases. Considering the five years average
performance and expenditure trends of DHI and the seven DOCs, the gross turnover is
sufficient to meet the likely increase in pay and allowances of DHI and the seven DOCs. The
revision is estimated to cost Nu. 281.21 million.
Since the dividend from DHI is negotiated and agreed, it is not likely to have a major impact
on the dividend payments to the Government. As regards to the corporate income tax from
the DOCs, past performance trends indicate that the annual growth will be able to absorb the
additional expenditure on pay and allowances due to salary revision, Hence, CIT may not
decline.
Table 12.2: Spiraling Effect on DOCs
#
1
Expenditure
Description
Gross
Revenue/
Turnover
Other
Expd.
Baseline-
27,545.61
13,640.07 1,874.74 140.44
13,905.54 4,183.38 9,722.15
34,835.47
18,012.68 2,155.95 159.34
16,822.79 5,046.84 11,913.87 9,173.16 14,220.00
4,372.60
2,917.26
Pay &
Allc.
Travel
PBT
CIT
PAT
Dividend
Govt.
Revenue
to Govt.
7,559.08 11,742.46
2012
2
Proj.
2013
Differ7,289.86
ence
12.6
281.21
18.89
863.45
2,191.72
1,614.09 2,477.54
Royal Monetary Authority of Bhutan (RMA)
As per the RMA Act, the pay and allowances of Governor and Deputy Governors are approved
by the Government and the pay & allowances of RMA’s employees are approved by the Board.
With regard to pay scales, there are four levels of category; viz. a) officers, b) administrative
staff, c) administrative support staff and d) general support staff.
The salary structure of RMA is as given in the Annexure 17.
The Commission noted the existing pay and allowances of the Governor and Deputy
Governors of RMA. The Commission recommended that any revisions of the existing pay
and allowances of these positions hereafter may be done in line with pay structures for the
Heads and Members of the Constitutional bodies.
12.7 Financial overview of the Corporate Sector
In 2012, the total revenue of SOEs increased to Nu. 39.812 billion from Nu. 37.044 billion
in 2011 representing an increase of 7.5 percent. DGPC earned about Nu. 11.140 billion
representing 28 percent of the total earnings. The overall profit before tax increased by 6.8
percent and the revenue to the Government in the form of tax and dividend also increased by
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6 percent from Nu. 7.647 billion in 2011 to Nu. 8.107 billion in 2012.
Although the total revenue to government increased, the average return on equity has
decreased due to corporatization of companies with low profitability such as CDCL, NHDC
and infusion of capital in DCCL, DPL and BDBL.
Table 12.3: Overall financial overview
Financial Facts
2012
Nu. in millions
2011
2010
Gross turnover
39,812.72
37,044.40
35,129.45
Profit before tax
16,738.62
15,667.00
15,966.23
Total net worth
80,019.57
70,819.28
64,646.61
Total asset
178,056.86
163,851.51
163,757.93
Govt.’s share of net worth in the companies
71,763.79
64,672.86
60,661.02
8%
13%
15%
8,107.30
7,647.40
7,806.60
Average return on equity
Total Revenue to the Government
Source: PED, MoF
Of the total revenues, Nu. 362.82 million was provided to SOEs in the form of subsidies and
grants representing about 4.5 percent of total revenues. The BBSC received the highest subsidy
of Nu. 146.504 million followed by Drukair Corporation with Nu. 132.68 million and Nu.
71.592 million for BDBL in the form of corporate tax exemption. The Government thus far
provided Nu. 1.059 billion as interest subsidy for the purchase of aircraft in 2004 and the
proposal is to provide similar financial support for the purchase of new aircraft in FY 201415. Now with the private airlines operating in the country, the extension of such facilities to
Drukair should be reviewed to promote fair competition in the market.
12.8 Private Sector
Though private sector has grown rapidly over the years, the employees’ remuneration is still
below the average civil and corporate employees. The compression ratio is highest in the
private sector due to huge gap between salary of management and support level. Moreover,
unlike in civil service and corporate bodies, the private employees in general do not have post
service benefits such as pension and gratuity.
In the private sector, the top management is paid generously whereas the lower level staffs are
paid much lower than those in the similar position of the civil service. With revision of public
service’s pay and allowances, it is likely that the private sector’s pay and allowances will also
undergo some upward revision. This may have an impact on those private companies who
cannot afford the revision.
82 of 115
While wage raise could motivate better performance of the employees and therefore the
productivity of the company, the likely impact on profitability due to rise in salary and wage
bill could not be ascertained.
The Commission recommends that the Economic Stimulus Plan (ESP) be well targeted and
provided to the private sector in order to foster growth and employment in the country.
83 of 115
13 Impact
of Salary Revision
13 Impact of Salary
Revision
13.1 Annual Financial Implication
The gross financial implication of the recommended revision of the pay and allowances of
public servants is estimated at Nu. 2.441 billion per annum. This includes Nu. 1.839 billion for
salary, Nu. 367.895 million for allowances and Nu. 235.464 million for PF and gratuity. The
net implication of the consolidation of existing lumpsum salary allowance is Nu. 300 million.
The monetization of the duty free vehicle quota and withdrawal of designated vehicles will
have additional financial implication but it’s expected to be financed through increase in
motor vehicle tax revenues.
Table 13.1: Financial Implication of pay & allowances (Nu. in millions)
SI.
No
Description
I
Salary
II
Existing Lump sum
2010 Pay
Salary
Scale
Merger
20%
Revision
after
Merger
Implication
from Revision
4,855
5,497
6,694
1,839
Lump Sum Salary Allowance
643
-
-
-
III
Allowances
969
1,165
1,243
273
1
Housing
30
33
34
4.7
2
Leave Encashment (LE)
275
305
372
97.4
3
Professional - Teaching
309
356
356
46.4
4
Professional - Medical
85
97
97
12.7
5
Professional - Audit (20%)
8
9
9
1.2
6
Professional - ACC Investigator
(45%)
3
4
4
0.5
7
Professional - ACC (20%)
1
1
1
0.1
8
Difficulty Area
95
189
189
94.7
9
High Altitude
3
5
5
2.3
10
Radiation
0
1
1
0.4
11
Uniform
2
5
5
2.4
12
Communication
6
6
6
-
13
Cash Handling
4
4
4
-
14
Professional - DCA
0
1
1
1
15
Driver & Vehicle Maintenance
9
9
9
-
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20%
Revision
after
Merger
Implication
from Revision
2
2
-
1
1
-
-
10
10.0
126
126
126
-
Discretionary Grant
10
10
10
-
IV
Leave Travel Concession(LTC)
360
378
453
93
V
Post Service Benefit (PSB)
658
744
893
235
1
Provident Fund (PF)
481
541
650
168
2
Retirement Benefits
176
203
243
67
VI
Total
7,484
7,784
9,283
2,441
Existing Lump sum
2010 Pay
Salary
Scale
Merger
SI.
No
Description
16
DT Chairperson
2
17
Dy. DT Chairperson
1
18
Provision for Pay Fixation
19
Foreign Service
20
13.2
Financing Pay and Allowance Revision
The revision of the pay and allowances shall be financed from the fiscal space created through
expenditure rationalization and revenue enhancement measures.
Table 13.2: Financing Pay and Allowance Revision (Nu. in millions)
Sl.
Sources
No.
A
B
1
2
3
C
1
2
3
4
Additional recurrent expenditure
Additional Revenue
Chhukha Power Tariff Revision
Additional PIT revenue from salary
revision
Tax Revenue from Vehicle Quota
Expenditure Savings
Containing Civil Servant Growth at
2% p.a.
Capping in-country travel at 15%
of the Wage Bill
Savings from Pool Vehicle Recurrent Cost
Converting Salary based allowance
to lumpsum allowance
2014/15 2015/16 2016/17 2017/18 11th
FYP
Est.
Proj.
Proj.
Proj.
2,999
2,281
2,325
2,370
9,974
1,282
554
555
557
2,948
830
380
380
380
1,970
76
78
79
81
314
376
700
96
728
96
757
96
787
664
2,972
184
187
191
195
757
107
107
107
107
428
409
409
409
409
1,636
0
25
50
76
151
85 of 115
D
E
F
Provision for salary consolidation
Fiscal space (B+C+D)
Balance (E-A)
1,279
3,261
262
1,279
2,561
280
1,279
2,591
266
1,279
2,623
253
5,116
11,036
1,062
The recommended revision of pay and allowances is fully financed within the fiscal space. A
surplus of Nu. 1.062 billion is projected in the fiscal space. However, the realization of the
fiscal space will depend on full implementation of the recommendations of the Commission.
13.3 Fiscal Projection after Revisions
With the pay and allowance revision, the current expenditure for the 11th FYP period has been
projected at Nu. 119.846 billion, which is 7 percent lower than the original figure of Nu.
129.078 billion. Since the original projected current expenditure was higher, the fiscal deficit
is expected to improve to 0.04 percent of GDP as against the projected of 1.0 percent.
The average coverage of domestic revenue to current expenditure is projected at an average
of 118 percent and surplus revenue will be sufficient to cover on an average of 25 percent of
capital expenditure.
Table 13.3: Fiscal projection after revision
Revenue & Grants
Domestic Revenue
Tax
Non-tax
Grants
Outlay
Total Expenditure
Current
Capital
Net Lending
Fiscal Balance
Net Borrowings
Borrowings
Repayments
Resource Gap
2013/14
Budget
29,828
21,981
15,474
6,507
7,835
35,421
37,319
19,104
18,215
-1,898
-5,593
-92
2,667
2,758
-5,684
Revenue & Grants
Domestic Revenue
Grants
25.2
18.6
6.6
Description
2014/15 2015/16 2016/17
Proj.
Proj.
Proj.
38,677
40,667
42,665
25,041
26,308
28,803
17,853
19,344
21,699
7,188
6,965
7,104
13,636
14,359
13,862
38,982
41,978
42,289
40,922
44,059
44,304
23,156
23,931
25,697
17,766
20,128
18,606
-1,939
-2,081
-2,015
-305
-1,311
376
3,459
-331
39
6,364
2,916
3,027
2,905
3,247
2,988
3,154
-1,641
415
In percent of GDP
29.2
27.8
26.3
18.9
18.0
17.7
10.3
9.8
8.5
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2017/18
Proj.
54,715
40,090
28,203
11,887
14,625
43,150
45,243
27,958
17,285
-2,093
11,565
2
3,167
3,165
11,567
11th FYP
206,552
142,223
102,573
39,650
64,317
201,820
211,846
119,846
92,000
-10,026
4,732
3,078
18,141
15,063
7,810
25.7
18.9
6.9
26.8
18.4
8.4
Outlay
29.9
29.5
Total Expenditure
31.5
30.9
Current
16.1
17.5
Capital
15.4
13.4
Fiscal Balance
-4.7
-0.2
Net Borrowings
-0.1
2.6
Resource Gap
-4.8
2.4
Coverage by Domestic Revenue (DR)
Current Expenditure
115%
108%
by DR
Capital Expenditure
16%
11%
by Revenue Surplus
Total Expenditure by
59%
61%
DR
28.7
30.1
16.4
13.8
-0.9
-0.2
-1.1
26.0
27.3
15.8
11.5
0.2
0.0
0.3
20.3
21.3
13.1
8.1
5.4
0.0
5.4
26.9
28.2
15.8
12.4
-0.04
0.5
0.4
110%
112%
143%
118%
12%
17%
70%
25%
60%
65%
89%
67%
13.3.1 Domestic revenue
Even with a modest revenue projection, the coverage of current expenditure by domestic
revenue is projected at an average of 118 percent in the 11th FYP fulfilling the Constitutional
requirement. This coverage has improved significantly by about 5 percent. The revenue
balance will improve from Nu. 14.018 billion to Nu. 22.377 billion without accounting for
increased PIT from salary revision, expected increase in vehicle import tax, and other onetime
revenue receipts such as proceeds from auctioning of old pool vehicles.
13.3.2 Current Expenditure
Pay and allowances as a percent of current expenditure is about 44 percent after revision as
compared to existing 43 percent. Maintaining this percentage hinges on containing the civil
servants’ growth to 2 percent per annum and capping in-country travel budget at 15 percent
of total pay and allowance budget.
13.3.3 Public debt
The external debt has been growing steadily over the past decade. As per the IMF Article IV
Consultation Mission of March, 2014, Bhutan is categorized under moderate risk of debt
distress as the policy related to LIC-DSA thresholds for external debt have been breached
for several debt indicators and is projected to continue as more hydropower projects which
require huge investments will be initiated in the medium term. Since the pay revision will be
fully financed through the fiscal space, there will be no impact on public debt.
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13.3.4 Inflation
In general, substantial revision of pay and allowances of a large number of employees is
normally accompanied by rise in price of local consumer goods, imported goods, services and
rents. In order to protect inflationary pressures, relevant agencies should intervene through
appropriate measures and instruments. For example, RMA should track inflation and agencies
such as Ministry of Agriculture and Forests make necessary logistic arrangement to ensure
continuous supply of local produce (vegetable, fruits, rice, etc.) in the market at affordable
prices.
13.3.5 Other Fiscal & Economic Projections
The economic projections following the pay revision remain the same as projected for the 11th
FYP. This is mainly due to the fact that provisions for pay revision were already included in the
11th FYP when making its projections. Moreover, the Commission made extensive efforts to
ensure that the pay revision is accompanied by a number of fiscal measures that will help to
ensure that there is no further fiscal deterioration on account of the pay revision.
The IMF Article IV Consultations Mission in March, 2014 made the observation in its concluding
statement that “any civil service wage hike should be accompanied by complementary
revenue measures, otherwise they would lead to further deterioration of fiscal balances
and a resurgence of overheating pressures.” The Commission is confident that even after
implementing the proposed pay revision, any negative impact on our economic prospects
arising directly from it will be minimal, as revenue measures as well as expenditure control
measures were considered.
Going forward, the Mission’s assessment on economic outlook and risks in the near and
medium term is in line with 11th FYP projections. The growth momentum is expected to pick
up as activities in the hydropower and its related activities recover and the Government’s
efforts to enhance investments and private sector development start to materialize. Inflation
is expected to be largely influenced by price developments in India and the fiscal measures
recommended to calm consumption overall, should also minimize the effects of additional
disposable income following the pay revision.
Notwithstanding the above, the Commission would like to underline the challenges for
macroeconomic management in the 11th FYP, which will be critical to achieving the 11th FYP
goals and objectives. In particular, external financing should be monitored closely given the
pressures on the overall balance of payments position that is projected in the 11th FYP. There
will also be a need to better manage the financial sector to avoid the problems associated with
rapid credit growth, including pressures on the INR reserves. At the same time, it will be critical
to ensure that investments, public and private are implemented in time and within estimated
cost, particularly the hydropower projects. It is the Commission’s hope that the positive
impact of the revised Pay, Allowances and Benefits on the public servants performance will far
outweigh associated costs and help public servants rise to these challenges and overcome it.
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14 IMPLEMENTATION
OF NEW
STRUCTURE
14 IMPLEMENTATION
OF NEW
PAYPAY
STRUCTURE
The Second Pay Commission, in adherence to its mandates and keeping in mind the relevant
Articles of the Constitution and provisions of the BCSR 2012, reviewed the existing pay
and allowances to recommend a holistic pay and allowances in relation to the roles and
responsibilities entrusted on the civil and public services, and at the various position levels.
The recommended pay and allowances reflect the increased cost of living due to inflation and
other economic and social factors.
The Commission has tried to minimize the impact of the pay revision and to make it affordable
to the Government, and took into consideration the sustainability of the Pension Fund.
Affordability and long term financial sustainability for the government was a major concern
for the Commission, and the Commission recommends that the Government consider the
proposals for tax measures and expenditure rationalization to meet the deficit until Bhutan
attains the national goal of self-reliance.
The Commission recommends implementation of the pay revision as below:
New Scale: Merge existing lumpsum salary allowance, cap all percentage based allowances
to the merged salary except housing allowance, and provide a 20 percent revision on the
merged amount and adopt the new scale starting FY 2014-15. Where there is no existing
lumpsum salary allowance, new scales to be fixed as recommended in the various sections
of the recommendations.
The Commission recommends salary revision on the merger and adoption of new pay scales
as appended at Annexure 3.
Pay Fixation
On approval of the recommendations by the Government, the Ministry of Finance shall issue
guidelines for fixation of pay as per norms.
Effective Date
The Commission recommends that the proposal as submitted be implemented from 1st July,
2014.
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15 General Recommendations
15 General Recommendations
15.1 Recommended Fiscal Measures
15.1.1 Revenue Enhancement Measures
1.
Fiscal Incentives: For systematic review of the cost-effectiveness of tax concessions
granted in the past, an accurate accounting is required for the revenue foregone
on each major tax-reducing concession targeting specific sectors or economic
agent.

A moratorium on new concessions should be considered as a first step.

Based on the outcome, specific recommendations could be proposed to
enhance domestic revenue in the medium to long term period.
2.
Capital gains tax: Explore the possibility of introducing capital gains tax or
inheritance tax under direct tax revenue.
3.
Royalty: Review the existing rates on royalty on state resources.
4.
Refine the classification and rates of sales tax and customs duty: Existing
system has eight different rates for different commodities, which makes the
implementation and enforcement of duties and taxes difficult to collect and
monitor. Moreover, importers maneuvers with the rates to avoid tax and duties.
This would ease tax administration and give rise to opportunities for increased
tax collection.
5.
The domestic revenue forecast includes the Excise Duty Refund (EDR) from
India. Tax refunds from India should be pursued to ensure projected revenues.
15.1.2 Measures on Expenditure Rationalization
1.
Rationalize expenditure on conspicuous consumption of the government
agencies.
2.
Strengthen monitoring and evaluation mechanism in Department of National
Budget.
3.
Institute result oriented or output base budgeting method.
4.
In order to rationalize the purchase of computers, a lumpsum amount can be
provided to civil servants for the purchase of computers which they can own after
certain period of time. They can add on to this lumpsum amount to purchase the
computer of their choice.
5.
Rationalize the subsidies provided to the SOEs and autonomous agencies like
RUB, Thromdes, and others. The subsidies should be time bound and targeted.
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6.
Government offices occupancy in the private buildings should be time bound
and based on open market rates as housing supply has increased as compared
to the past.
15.2 Cost of Living Adjustment (COLA)
Cost of living adjustment (COLA) is a mechanism for protection of income erosion against
inflation. It is commonly used for Social Security retirement benefit. A COLA means that your
monthly income is indexed to inflation. The added benefit of such indexation is that periodic
adjustments to pay for inflation is not required as pay is automatically protected through
its linkage to inflation. Also, where people make contributions to defined benefit pension
schemes from their pay (along with contributions from employers), this system ensures that
build-up of pension contribution and pension payout is smoother and more closely linked
than pay adjustments which result in higher pay revisions.
The First Pay Commission recommended indexation of salary to annual CPI but with a
threshold of 7 percent or whichever is lower. Assuming the continuation of same level of
average inflation as in the 10th FYP, the average inflation since 1988 was 7.7 percent per
annum. Should the cost of living adjustment method of income protection be followed as
recommended by the First Pay Commission, all civil servants salary income would be more
than adequately protected. The required total individual income protection against inflation is
20.1 percent (since the last pay revision in 2011) and the COLA will be around 25.3 percent
without considering the 2 percent annual salary increment.
While it is good to protect the income of the public servants through such mechanism, on
the negative side it can put pressure on the exchequer during economic downturns when
revenues fall but inflation could still be high.
As a result, governments in other countries have used innovative ways. For example in
Singapore, civil servants are provided bonuses based on a) Real Median Income Growth Rate
b) Real Income Growth Rate of the Lowest 20th Percentile Income, c) Unemployment Rate,
d) Real GDP Growth Rate. Basically such a system ties award of bonus to civil service to the
performance of the economy, implying that they are largely responsible for what happens to
the economy, which should be the case.
Such a system is difficult to adopt for Bhutan at the present juncture in view of the narrow
tax base and current economic situation. However, as Bhutan heads toward self-reliance and
with expectations of domestic revenues being in excess of expenditures at one time or the
other, adoption of COLA as implemented in Singapore might be an important tool to ensure
that the pay and allowances of civil and public servants are adjusted accordingly to how the
economy moves.
The Commission recommends that the government continue to track COLA and other related
parameters for incorporation by future Pay Commissions.
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15.3 Performance Based Incentives
The civil and public services must endeavor to create a “culture based on principles of
meritocracy, excellence and hard work”. Performance based incentives could be the fastest
way to get there.
A major goal of any compensation programme should be to motivate employees to perform
their best. Performance should be the standard by which employees move upward within
the pay grade for the job. In most variable pay plans performance is a factor that leads to an
addition to basic pay.
The idea of relating pay to performance is highly attractive and incentivizes higher productivity.
Most employees agree that there is a need to make distinction and institute reward system
between the performers and non-performers contrary to the current indiscriminate treatment.
However, the success of any performance-based reward scheme will depend very much on a
credible supporting performance management framework that is fair and consistently applied.
This is currently missing. Also, adequate funding is essential to allow meaningful rewards to
be provided as a means to motivate staff.
At the same time, it is also important to recognize that such systems have downsides such
as creating unhealthy rivalry in the workplace, and breeding a culture of flattery. However, a
number of public sector corporations have already started such performance based incentive
schemes with varying degrees of success. The introduction of the system has brought about
remarkable changes in the work places and brought about efficiencies in the delivery of their
services.
Taking the success stories as a cue, the Commission would like to recommend that the
government implement the Government Performance Management System at the earliest.
15.4 Independence of Constitutional Bodies from RCSC
During the consultations on the difficulties faced by the civil and public services in delivering
their mandates, other than the need to revise pay and allowances, an issue that kept surfacing
was the delinking of the constitutional bodies from the civil service. Many of the constitutional
bodies expressed that they were handicapped in delivering on the services as they had no
control over the very people that were supposed to be implementing their mandates. The RCSC
is the parent body for the civil servants deputed and/or posted to these constitutional bodies
and decides on promotions, trainings, and postings of those civil servants. The constitutional
bodies opined that they needed to be insulated from interference, political or otherwise, for
them to deliver their services fairly and effectively.
15.5 Other General Recommendations
1.
Implement Thromde Finance Policy for financial sustainability
2.
Implement Consumer Protection Act and Tenancy Act
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3.
4.
Introduce non-monetary benefits/allowances for government employees with
disabilities

enhanced number of days for casual leave

special aids and appliances for facilitating office work
liberal flexi hours

better access to work places

extra allowances for parents having disabled children
Some of the salary revision recommendations are in contravention to the provisions
of some of the existing Acts, Rules and Regulation. As the recommendations
in respect of pay and allowances are mandated to the Pay Commission by the
Constitution, the relevant provisions of the following Acts, Rules and Regulation
may need to be reviewed:
i)
Judicial Services Act, 2007
ii)
Parliamentary Entitlement Act, 2008
iii)
Parliamentary Entitlement Rules and Regulation, 2009
iv)
Bhutan Civil Service Act, 2010
v)
Bhutan Civil Service Rules and Regulation, 2012
vi)
Foreign Service Entitlement Rules and Regulations, 2002
vii)
Labour and Employment Act, 2007
viii) Entitlement and Service Conditions Act for the Holders, Members and
Commissioner of Constitutional Office, 2010
93 of 115
16 ACKNOWLEDGEMENT
16 ACKNOWLEDGEMENT
The Commission would like to express our sincere gratitude to the Government for the trust
and confidence placed upon the team. Despite various constraints and challenges faced in
formulating Pay Policy, collection, compilation and analysis of data, the Commission made all
efforts to leave no stone unturned.
The Commission’s deliberations and discussions were aimed at drawing up appropriate
recommendations in keeping with the given mandate. The Commission would like to thank
all the stakeholders for the valuable feedback provided during the course of its assignment.
94 of 115
17 ANNEXURES
17
ANNEXURES
Annexure 1: Executive Order
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Annexure 2: List of Agencies Consulted
A
1
2
3
4
5
6
7
B
I
1
II
1
2
3
4
III
1
2
3
4
IV
1
2
3
4
5
V
1
2
3
4
VI
1
2
3
The Chairman’s meetings
Lyonpo Jigme Zangpo, Speaker, National Assembly
Lyonpo Thinley Gyamtsho, Chairperson, RCSC
Dasho Sonam Tshering, Secretary, MoEA and Chairman, First Pay Commission
Dasho Pema Thinley, Vice Chancellor, RUB
Dasho Ugyen Chewang, Auditor General, RAA
Dasho Neten Zangmo, Chairperson, ACC
Dasho Tshering Wangchuk, Supreme Court Judge
Representation by Agencies
Center for Bhutan Studies and GNH
Dasho Karma Ura, President
Ministry of Education
Aum Sangay Zam, Secretary
Tshewang Tandin, DG
Kinley Gyeltshen, CHRO
Dhendup Tshering, Sr. HRO
Ministry of Health
Dr. Ugyen Dophu, DG
Khampa, DCHRO
Tandin, Nursing Superintendent
Tshering Dema, Budget Officer
Ministry of Foreign Affairs
Dasho Yeshey Dorji, Foreign Secretary
Sonam Tobden Rabgay, Director General, PPD
Tsewang C. Dorji, Chief, SAARC Division
Passang Wangdi, Chief Adm. Officer
Yeshi Xangmo, Accounts Officer
Royal Audit Authority
Jamtsho, Dy. Auditor General
Dechen Pelden, Asst. Auditor General
Gatu Drukpa, Chief Audit Officer
Sangay Tenzin, Asst. Programme Officer
Department of Local Governance, MoHCA
Dorji Norbu, Director General
Rinzin Penjor, Chief Programme Officer
Tseten Dorji, Sr. Programme Officer
98 of 115
VII
4 Wangdi Gyeltshen, Sr. Programme Officer
NPPF
1 Sonam Yeshey, Provident & Pension Head
2 Tshering Yangzom, Analyst
VIII
MoF
1 Thinley Yangdon, Sr. Planning Officer
Annexure 3: Recommended Pay Scale of Civil and Public Servants
Position Level
Pay Scale 2014
Increase from
2010 Scale
Increase After
Merger
PerAmount Percent Amount
cent
Min.
Incr.
Max.
Prime Minister
150,000
3,000
165,000
72,000
92%
72,000
92%
Cabinet Ministers
120,000
2,400
132,000
42,000
54%
42,000
54%
Speaker of NA
132,000
2,640
145,200
54,000
69%
54,000
69%
Chairperson of NC
120,000
2,400
132,000
42,000
54%
42,000
54%
Opposition Leader
120,000
2,400
132,000
42,000
54%
42,000
54%
Dy. Speaker of NA
75,600
1,510
83,150
12,600
20%
12,600
20%
Dy. Chairperson of
NC
75,600
1,510
83,150
12,600
20%
12,600
20%
Members
66,600
1,330
73,250
16,155
32%
11,110
20%
Chief Justice of Supreme Court
132,000
2,640
145,200
54,000
69%
54,000
69%
Drangpons of SC
75,600
1,510
83,150
12,600
20%
12,600
20%
Chief Justice of HC
66,600
1,330
73,250
3,600
6%
3,600
6%
Drangpons of High
Court
63,200
1,265
69,525
12,755
25%
7,710
14%
Chairman
120,000
2,400
132,000
42,000
54%
42,000
54%
Council Members
63,200
1,265
69,525
12,755
25%
12,755
25%
Prime Minister &
Cabinet Ministers
Judiciary
Privy Council
Constitutional Bodies
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Position Level
Pay Scale 2014
Increase from
2010 Scale
Increase After
Merger
cent
Min.
Incr.
Max.
Chairperson, RCSC
81,900
1,640
90,100
18,900
30%
18,900
30%
Chairperson, ACC
81,900
1,640
90,100
18,900
30%
18,900
30%
Chief Election Com81,900
missioner, ECB
1,640
90,100
18,900
30%
18,900
30%
Auditor General
81,900
1,640
90,100
18,900
30%
18,900
30%
63,200
1,265
69,525
12,755
25%
12,755
25%
63,200
1,265
69,525
12,755
25%
12,755
25%
63,200
1,265
69,525
12,755
25%
12,755
25%
75,600
1,510
83,150
12,600
20%
12,600
20%
Thrompons
53,000
1,060
58,300
14,525
38%
8,825
20%
Gups
20,000
5,645
39%
5,645
39%
Mangmi
15,000
4,235
39%
4,235
39%
Geydrungs
13,000
3,430
36%
3,430
36%
Chiwog Tshogpas
7,000
2,000
40%
2,000
40%
Dzongkhag Throm
Tshogpa
7,000
2,000
40%
2,000
40%
Thromdey Tshogpa
7,000
2,000
40%
2,000
40%
Commissioners,
RCSC
Commissioners,
ACC
Commissioners,
ECB
Office of Attorney
General
Attorney General
Local Government
Civil Servants
Cabinet Secretary
75,600
1,510
90,700
12,600
20%
12,600
20%
Government Secretaries
66,600
1,330
79,900
16,155
32%
11,110
20%
EX/ES-1
63,200
1,265
69,525
17,340
38%
10,546
20%
EX/ES-2
53,000
1,060
68,900
14,525
38%
8,825
20%
EX/ES-3
44,800
895
58,225
12,278
38%
7,460
20%
P1
35,300
705
45,875
9,690
38%
5,896
20%
P2
31,200
625
40,575
8,580
38%
5,229
20%
P3
27,300
545
35,475
7,470
38%
4,532
20%
P4
24,300
485
31,575
6,640
38%
4,024
20%
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Position Level
Pay Scale 2014
Increase from
2010 Scale
Increase After
Merger
cent
Min.
Incr.
Max.
P5
19,900
400
25,900
5,440
38%
3,298
20%
S1
18,300
365
23,775
4,995
38%
3,024
20%
S2
16,600
330
21,550
4,545
38%
2,759
20%
S3
15,200
305
19,775
4,185
38%
2,553
20%
S4
13,500
270
17,550
3,725
38%
2,277
20%
S5
12,500
250
16,250
3,455
38%
2,115
20%
O1
11,800
235
15,325
3,220
38%
1,949
20%
O2
11,100
220
14,400
3,040
38%
1,846
20%
O3
10,100
200
13,100
2,775
38%
1,690
20%
O4
9,400
190
12,250
2,595
38%
1,587
20%
2,690
38%
1,477
20%
GSP
GSP*
9,000
Para Regular
P3
27,300
545
35,475
7,470
38%
4,530
20%
P5
19,900
400
25,900
5,440
38%
3,298
20%
S1
18,300
365
23,775
4,995
38%
3,024
20%
S2
16,600
330
21,550
4,545
38%
2,759
20%
S3
15,200
305
19,775
4,185
38%
2,553
20%
S4
13,500
270
17,550
3,725
38%
2,277
20%
S5
12,500
250
16,250
3,455
38%
2,115
20%
O1
11,800
235
15,325
3,220
38%
1,949
20%
O2
11,100
220
14,400
3,040
38%
1,846
20%
O3
10,100
200
13,100
2,775
38%
1,690
20%
RAPA
Level S4
13,500
270
17,550
3,620
37%
3,620
37%
Level O1
11,800
235
15,325
3,180
37%
3,180
37%
Level O3
10,100
200
13,100
2,740
37%
2,740
37%
Others
ESP
7,000
2,000
40%
2,000
40%
NFE Instructors
8,400
2,400
40%
2,400
40%
Consolidated contract
14,000
4,000
40%
4,000
40%
*GSP I & II are Consolidated
101 of 115
Annexure 4: High Altitude Places above 12000 Feet
Sl.No.
Village
Dzongkhag
1
Tshozhong
Gasa
2
Lunana
Gasa
3
Hedi
Gasa
4
Laya
Gasa
5
Gangyul
Thimphu
6
Lingshi
Thimphu
7
Soi
Thimphu
8
Barshong
Thimphu
Annexure 5: High Altitude Places between 10,000 feet and 12,000 feet
Sl.No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Village Name
Gogonang
Phobjikha
Longtoe
Shingkhar
Shingnyer
Tangsibi
Ura
Hedi
Lunana
Tshozhong
Laya
Mera
Gangyul
Lingshi
Soi
Barshong
Dzongkhag
Wangdue Phodrang
Wangdue Phodrang
Wangdue Phodrang
Bumthang
Bumthang
Bumthang
Bumthang
Gasa
Gasa
Gasa
Gasa
Trashigang
Thimphu
Thimphu
Thimphu
Thimphu
102 of 115
Annexure 6: Projection of supply of medical and teaching professionals in 11th FYP
Sl.No Degree
2014
2015 2016 2017 2018 TOTAL
Health
1
MBBS
20
36
31
38
23
148
2
BDS
7
9
7
11
2
36
3
B.Sc.Nursing
32
8
10
-
-
50
4
B.Sc.Pharmacy
4
3
8
-
-
15
5
B.Sc.Physiotherapy
1
-
4
3
-
8
6
B.Sc.Allied Health Sciences
-
-
-
-
-
-
7
B.Sc.Medical Lab. Technology
4
4
4
4
-
16
8
B.Sc.Radio Technology
1
-
-
-
-
1
9
B.Biomedical Engineering
1
-
3
3
-
7
10
B.Medical Radio Imaging Tech.
1
-
2
-
-
3
11
B.Sc.Nutrition and Diet
-
-
-
-
-
-
12
Homeopathic Medicine and Surgery
-
-
-
4
-
4
Total (Health)
71
60
69
63
25
288
Education
1
B.Ed
531
761
672
672
-
2,636
2
PGDE
220
255
255
255
-
985
Total (Education)
751
1,016
927
927
-
3,621
Source: Civil Service Statistics, 2013, Royal Civil Service Commission
Annexure 7: Recommendation for One time Lumpsum Personal Effects Allowance on Transfer
from and to HQ
1
2
3
4
Title / Position
New
York
Brussels
Geneva
Kuwait
BKK
Dhaka
New
Delhi
Kolkata
Currency
USD
EURO
CHF
USD
USD
USD
INR
INR
Head of
Mission/
Ambassador
Diplomat
(EX III/P1)
Diplomat
(P2-P3)
Diplomat
(P4-P5)
1,750 2,250
2,100
2,000
600
250
21,500
12,500
1,750 2,250
2,100
2,000
600
250
21,500
12,500
1,750 2,250
2,100
2,000
600
250
21,500
12,500
1,750 2,250
2,100
2,000
600
250
21,500
12,500
103 of 115
5
6
Non-Diplomatic Staff (S1-S5)
Non-Diplomatic Staff (O1-O4)
-
-
1,000
300
125
10,750
6,250
-
-
1,000
300
125
10,750
6,250
Note: Includes accompanied Baggage plus whole family;
Annexure 8: Recommendation for One time Lumpsum Personal Effects Allowance on Transfer
from Missions/Embassies to HQ
Title /
Sl. Position
No
Currency
New
York
Brussels
Geneva
Kuwait
Bangkok
Dhaka
New
Delhi
Kolkata
USD
EURO
CHF
USD
USD
USD
INR
INR
Head of
Mission/
1
5,500
3,000
3,650
2,200
2,750
1,250 63,000 40,000
Ambassador
Diplomat
2
5,500
3,000
3,650
2,200
2,750
1,250 63,000 40,000
(EX III/P1)
Diplomat
3
5,500
3,000
3,650
2,200
2,750
1,250 63,000 40,000
(P2-P3)
Diplomat
4
5,500
3,000
3,650
2,200
2,750
1,250 63,000 40,000
(P4-P5)
Non-Diplomatic
5
1,100
1,350
600 32,000 20,000
Staff (S1S5)
Non-Diplomatic
6
1,100
1,350
600 32,000 20,000
Staff (O1O4)
Note: Actual after completing required procurement process and production of boarding
pass or onetime payment without having to account
104 of 115
Annexure 9: Recommendation for One Time Lumpsum Home Leave Passage Allowance
Sl.No Title / Position
New
York
USD
Brussels
EURO
Geneva
CHF
Kuwait
Currency
USD
Head of Mis1
sion/Ambas2,000 2,000 2,000
700
sador
Diplomat (EX
2
2,000 2,000 2,000
700
III/P1)
Diplomat (P23
2,000 2,000 2,000
700
P3)
Diplomat (P44
2,000 2,000 2,000
700
P5)
Non-Diplo5
matic Staff
700
(S1-S5)
Non-Diplo6
matic Staff
700
(O1-O4)
For head of Mission/
Ambassador additional to meet air ticket
500
500
500
250
cost difference (Business - Economy )
Note: Self, Spouse and max of 3 children below 18 yrs
New
Delhi
BKK
Dhaka
Kolkata
USD
USD
250
180
15,000
8,000
250
180
15,000
8,000
250
180
15,000
8,000
250
180
15,000
8,000
250
180
15,000
8,000
250
180
15,000
8,000
100
80
5,000
3,000
INR
Annexure 10: Recommendation for Furnishing Allowance
Sl.No Title / Position
Currency
New York
Brussels
Geneva
USD
Euro
CHF
USD
USD
USD
-
-
-
-
-
-
Kuwait Bangkok
South
Asia
1
Head of Mission/Ambassador
2
Diplomat (EX III/P1)
5,000
5,000
5,000
5,000
3,000
2,000
3
Diplomat (P2-P3)
5,000
5,000
5,000
5,000
3,000
2,000
4
Diplomat (P4-P5)
5,000
5,000
5,000
5,000
3,000
2,000
-
-
-
2,500
1,500
1,000
-
-
-
-
1,500
1,000
5
6
Non-Diplomatic Staff
(S1-S5)
Non-Diplomatic Staff
(O1-O4)
Note: One time lumpsum allowance and for unfurnished accommodation only
105 of 115
Annexure 11: DSA Rates (Travel Abroad)
Sl.
No
Country
Present
DSA
Sl.
No
($)
Recomm.
DSA ($)
30
Present
DSA
($)
Recomm.
DSA ($)
Burundi
186
190
Country
1
Afghanistan
140
140
31
Cambodia
90
90
2
Albania
140
140
32
Cameroon
100
165
3
Algeria
150
200
33
Canada
175
200
4
Angola
250
250
34
114
150
5
Anguilla
Canary
island
6
Antigua
230
230
35
Cape Verde
120
150
7
Argentina
140
200
36
200
200
8
Armenia
135
135
Cayman
Islands
9
Aruba
200
37
Central African republic
110
130
10
Australia
160
200
38
Chad
195
150
11
Austria
180
200
39
Chile
150
150
12
Azerbaijan
130
150
40
China
120
160
13
Bahamas
210
210
14
Bahrain
180
200
41
China, Hong
Kong
200
200
15
Bangladesh
100
100
42
130
200
16
Barbados
195
195
China, Macau
17
Belarus
145
145
43
Colombia
125
180
18
Belgium
180
200
44
Comoros
100
200
19
Belize
168
170
45
Congo
20
Benin
80
115
46
100
160
21
Bermuda
180
200
Congo Dem
Rep
22
Bolivia
130
130
47
Cook islands
100
140
48
Costa Rica
130
150
23
Bosnia &
Herzegovina
135
135
49
Cote d’ivoire
120
150
24
Botswana
125
150
50
Croatia
200
200
25
Brazil
150
170
51
Cuba
200
200
52
Cyprus
100
150
26
British virgin
island
53
200
200
27
Brunei
160
160
Czech Republic
28
Bulgaria
150
170
54
Denmark
200
200
29
Burkina Faso
130
140
55
Djibouti
130
130
300
200
106 of 115
160
Sl.
No
Country
Present
DSA
Sl.
($)
Recomm.
DSA ($)
85
Iceland
86
India
No
Country
Present
DSA
($)
Recomm.
DSA ($)
230
230
56
Dominica
200
170
57
Dominica
Republic
170
170
87
Indonesia
150
160
58
Egypt
130
150
88
Iran
160
160
59
Ethiopia
90
100
89
Iraq
80
120
60
Ecuador
150
160
90
Ireland
200
200
61
Equatorial
Guinea
160
91
Israel
180
200
62
El Salvador
160
160
92
Italy
210
200
63
Eretria
90
100
93
Jamaica
230
200
64
Estonia
150
190
94
Japan
300
300
65
Fiji
100
190
95
Jordan
140
160
66
Finland
210
210
96
Kazakhstan
150
160
67
France
200
200
97
Kenya
200
160
68
Gambia
90
150
98
Kiribati
70
100
69
Gabon
99
Kuwait
200
200
70
Georgia
130
130
100 Kyrgyzstan
145
140
71
Germany
200
200
101 Lao
60
100
72
Ghana
200
200
102 Latvia
200
200
73
Gibraltar
125
150
103 Lebanon
150
160
74
Greece
180
200
104 Lesotho
70
100
75
Greenland
200
200
105 Liberia
200
160
76
Grenada
200
200
106 Libya
100
160
77
Guam
150
180
107 Lithuania
175
175
78
Guatemala
140
140
108 Luxembourg
160
200
79
Guinea
200
109 Macedonia
130
200
110 Madagascar
100
120
80
Guinea Bissau
160
111 Malawi
95
100
81
Guyana
150
160
112 Malaysia
120
130
82
Haiti
170
150
113 Maldives
120
150
83
Honduras
200
150
114 Mali
100
100
84
Hungary
180
200
115 Malta
200
200
150
116 Mauritania
107 of 115
Given Separately
100
Present
DSA
($)
Recomm.
DSA ($)
117 Mauritius
150
170
118 México
230
119 Micronesia
120 Moldova
Sl.
No
Country
($)
146 Peru
200
150
200
147 Philippines
130
130
100
100
148 Poland
240
200
250
150
149 Portugal
200
200
200
150 Puerto Rico
160
160
150
151 Qatar
140
160
130
152 Romania
200
200
260
260
121 Monaco
122 Mongolia
Present
DSA
Recomm.
DSA ($)
120
123 Montenegro
Sl.
No
Country
124 Montserrat
140
170
125 Morocco
160
160
126 Mozambique
165
160
154 Rwanda
220
140
127 Myanmar
120
120
155 Samoa
100
120
128 Namibia
70
100
156
129 Nauru
100
130 Nepal
120
120
131 Netherlands
200
200
Netherlands,
132
Antilles
200
153
Russian Federation
Sao Tome
and Principe
120
157 Saudi Arabia
200
200
158 Senegal
110
150
159 Serbia
160
160 Seychelles
200
200
161 Sierra Leone
130
130
162 Singapore
180
180
New Zealand
145
200
134 Nicaragua
120
120
163 Slovenia
150
200
135 Niger
80
100
164 Slovak Rep
150
170
136 Nigeria
130
150
137 North Korea
170
170
75
150
133
138 Niue
165
Solomon
Islands
100
166 Somalia
75
100
139 Norway
210
230
167 South Africa
120
160
140 Oman
160
160
168 South Korea
200
200
141 Pakistan
120
130
169 Spain
200
200
150
170 Sri Lanka
120
130
142 Palau
St. Kitts and
Nevis
143 Panama
150
150
171
Papua New
144
Guinea
130
130
172 St. Lucia
145 Paraguay
150
150
173
108 of 115
St. Vincent
Grenadines
150
150
150
Present
DSA
($)
Recomm.
DSA ($)
174 Sudan
144
160
175 Suriname
130
130
176 Swaziland
78
100
177 Sweden
230
230
178 Switzerland
220
220
Syrian Arab
Republic
160
160
180 Taiwan
165
181 Tajikistan
Sl.
No
Country
Present
DSA
($)
Recomm.
DSA ($)
202 Venezuela
225
200
203 Vietnam
100
100
Sl.
No
204
Country
Virgin Island
USA
200
205 West Bank
130
206 Yemen
90
100
207 Yugoslavia
160
160
165
208 Zambia
85
100
140
140
209 Zimbabwe
120
100
182 Tanzania
140
140
183 Thailand
130
130
179
184 Timor-Leste
185 Togo
100
100
186 Tokelau
187 Tonga
188
100
75
100
Trinidad &
Tobago
150
150
189 Turkey
130
200
190 Tunisia
145
120
191 Turkmenistan
115
150
192
Turks & Caicos Island
150
193 Tuvalu
100
194 Uganda
135
135
195 Ukraine
130
200
196
United Arab
Emirates
210
210
197
United Kingdom
220
220
200
200
198 USA
199 Uruguay
200 Uzbekistan
201 Vanuatu
180
200
120
160
109 of 115
Annexure 12: Pay scale of SOEs under MoF
Grade
1 (BDBL & NPPF)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Minimum
40,970
34,630
27,270
24,085
21,120
18,805
15,400
14,170
12,840
11,730
10,410
9,630
9,135
8,585
7,805
7,245
6,890
6,557
6,030
Increment
1,025
865
680
600
530
470
385
355
320
295
260
240
230
215
195
180
170
165
150
Maximum
61,470
51,930
40,870
36,085
31,720
28,205
23,100
21,270
19,240
17,630
15,610
14,430
13,735
12,885
11,705
10,845
10,290
9,857
9,030
Annexure 13: The pay scales of CEOs of SOEs under MoF.
Sl. No.
SoEs
Basic Salary
1
BDBL
70,000
2
FCB
50,000
3
BAIL
50,000
4
WCCL
50,000
5
Bhutan Post
70,000
6
Kuensel Corp.
60,990
7
BBSC
50,000
8
NPPF
70,000
9
CDCL
70,000
10
NHDC
70,000
110 of 115
Annexure 14: DHI Salary Structure
Position Professional
Level
Service
PS5
Director
Position
Level
Corporate Service
Mini.
Incr.
Max.
CS5
Director
60,100
3,287
125,830
PS4
Associate
Director
CS4
Associate Director
50,800
2,778
106,370
PS3
Sr. Analyst
CS3
Sr. Manager
39,750
2,174
83,220
PS2
Analyst
CS2
Manager
28,400
1,553
59,470
PS1
Associate
Analyst
CS1
Associate Manager
19,360
1,059
40,500
Level
Operational Services
16,755
916
35,080
13,580
743
28,430
9,390
513
19,660
Sr. OS/Admin./
Asst./PA/Accountant
OS3
Office Secretary/
OS2
Admin. Asst./ PA/
Accountant/Receptionist
OS1
Driver
Level
Wage Services
Messenger/Security/
WS
Nu. 180 per day
Guard/Sweeper
Annexure 15: DHI Owned Companies Salary Structure
Position
Level
DGPC
BPC
BTL
BOB
Drukair
NRDCL
BP
BP
BP
BP
BP
BP
Average
BP
1
45,125
44,246
-
44,246
44,246
44,615
44,496
2
38,145
37,402
37,402
37,402
37,402
37,715
37,578
3
29,842
29,450
29,450
29,450
29,450
29,700
29,557
4
26,352
26,015
26,015
26,015
26,015
26,230
26,107
5
23,099
22,808
22,808
22,808
22,808
23,000
22,889
6
20,581
20,304
20,304
20,304
20,304
20,475
20,379
111 of 115
Position
Level
DGPC
BPC
BTL
BOB
Drukair
NRDCL
BP
BP
BP
BP
BP
BP
Average
BP
7
16,848
16,632
16,625
16,632
16,632
16,770
16,690
8
15,404
15,302
15,302
15,302
15,302
15,430
15,341
9
13,959
13,865
13,865
13,865
13,865
13,985
13,900
10
12,758
12,670
12,670
12,670
12,670
12,775
12,702
11
11,313
11,239
11,239
11,239
11,239
11,335
11,267
12
10,476
10,402
10,402
10,402
10,402
10,490
10,429
13
9,869
9,869
9,869
9,869
9,869
9,950
9,882
14
9,268
9,268
9,268
9,268
9,268
9,350
9,282
15
8,424
8,424
8,424
8,424
8,424
8,495
8,436
16
7,823
7,823
7,823
7,823
7,823
7,890
7,834
17
7,587
7,439
-
7,439
7,439
-
7,476
18
7,223
7,088
-
7,081
7,081
6,345
6,963
Annexure 16: Salary scales of CEOs/MD of DHI and DOCs
Sl. No.
Position Level
Basic Pay
1
Chairman, DHI
92,000
2
CEO, DHI
80,000
3
MD, DGPC
75,000
4
MD, BPC
75,000
5
CEO, BTL
70,000
6
CEO, BOB
75,000
7
CEO, Drukair
70,000
8
CEO, NRDCL
70,000
112 of 115
Annexure 17: Salary Structure of RMA
Position Level
Min.
Increment
Max.
Governor
95,000
1,900
114,000
Deputy Governor
80,000
1,600
96,000
Senior Manager/Director
50,870
1,270
88,970
Manager/Deputy Director
44,280
1,110
77,580
Senior Staff Officer
38,590
970
67,690
Staff Officer
33,570
840
58,770
Officer Grade I
29,230
730
51,130
Officer Grade II
25,460
640
44,660
Officer Grade III
22,140
550
38,640
Assistant Grade I
19,170
480
33,570
Assistant Grade II
16,870
420
29,470
Assistant Grade III
15,010
380
26,410
Assistant Grade IV
13,360
330
23,260
Assistant Grade V
11,760
290
20,460
Adm. Support Staff Grade I
17,060
430
29,960
Adm. Support Staff Grade II
14,840
370
25,940
Adm. Support Staff Grade III
13,210
330
23,110
Adm. Support Staff Grade IV
11,760
290
20,460
Adm. Support Staff Grade V
10,470
260
18,270
General Support Staff Grade I
14,940
370
26,040
General Support Staff Grade II
13,000
330
22,900
General Support Staff Grade III
11,310
280
19,710
General Support Staff Grade IV
10,070
250
17,570
General Support Staff Grade V
8,760
220
15,360
Category I – Officer
Category II - Administrative Staff
Category III - Administrative Support Staff
Category IV - General Support Staff
113 of 115
Annexure 18: Civil Service Pay Scales Trend
Pay Scale 1988
(March)
Pay Scale 1985
Pay Scale 1996
(July)
Pay Scale 1997
(July)
Position
Level
Min.
Incr.
Max.
Min.
Incr.
Max.
%
Min.
Incr.
Max.
%
Min.
Incr.
Max.
EX/ES-1
2,700
180
4,500
11,900
250
14,400
341%
15,500
325
20,375
30%
18,600
400
24,600
EX/ES-2
2,400
150
4,200
9,900
225
12,150
313%
13,000
290
17,350
31%
15,600
350
20,850
EX/ES-3
2,100
125
3,600
8,250
200
10,250
293%
10,975
260
14,875
33%
13,200
320
18,000
P1
1,800
100
3,300
6,350
175
8,450
253%
8,575
225
11,950
35%
10,300
270
14,350
P2
1,600
90
2,950
5,550
150
7,350
247%
7,575
200
10,575
36%
9,100
240
12,700
P3
1,350
80
2,550
4,800
125
6,300
256%
6,650
175
9,275
39%
8,000
210
11,150
P4
1,200
70
2,250
4,200
100
5,400
250%
5,900
150
8,150
40%
7,100
180
9,800
P5
1,000
60
2,200
3,350
75
4,475
235%
4,825
125
6,700
44%
5,800
150
8,050
S1
950
55
2,050
3,000
70
4,050
216%
4,400
110
6,600
47%
5,300
135
8,000
S2
850
50
1,850
2,700
65
3,675
218%
4,000
95
5,900
48%
4,800
115
7,100
S3
800
45
1,700
2,400
60
3,300
200%
3,650
85
5,350
52%
4,400
105
6,500
S4
725
40
1,525
2,100
55
3,090
190%
3,250
80
4,850
55%
3,900
100
5,900
S5
700
35
1,400
1,900
50
2,800
171%
3,000
70
4,400
58%
3,600
85
5,300
O1
680
30
1,280
1,750
45
2,560
157%
2,825
65
4,125
61%
3,400
80
5,000
O2
650
25
1,150
1,600
40
2,320
146%
2,650
55
3,750
66%
3,200
65
4,500
O3
600
20
1,000
1,400
35
2,100
133%
2,400
50
3,400
71%
2,900
60
4,100
O4
550
15
850
1,300
30
1,900
136%
2,250
40
3,050
73%
2,700
50
3,700
GSP-I
535
12
775
1,200
25
1,700
124%
2,125
35
2,825
77%
2,550
42
3,390
GSP-II
520
10
720
1,100
20
1,500
112%
2,000
25
2,500
82%
2,400
30
3,000
114 of 115
Max.
%
Min.
Incr.
Max.
%
20%
22,350
480
29,550
20%
33,970
680
44,170
20%
18,750
420
25,050
20%
28,500
570
20%
15,850
390
21,700
20%
24,090
20%
12,400
325
17,275
20%
20%
10,950
290
15,300
20%
20%
9,600
260
13,500
20%
20%
8,550
220
11,850
20%
20%
7,000
185
9,775
21%
20%
6,400
165
9,700
21%
20%
5,800
140
8,600
21%
21%
5,300
130
7,900
20%
20%
4,700
120
7,100
21%
20%
4,350
105
6,450
21%
20%
4,100
100
6,100
21%
21%
3,850
80
5,450
20%
21%
3,500
75
5,000
21%
20%
3,250
60
4,450
20%
20%
3,150
50
4,100
24%
20%
3,000
40
3,640
25%
Janaury 2011
Incr.
Pay Scale 2010
(July)
Min.
Incr.
Max.
%
52%
45,860
915
59,585
35%
6,794
37,050
52%
38,475
770
50,025
35%
5,700
480
31,290
52%
32,520
650
42,270
35%
4,818
18,970
380
24,670
53%
25,610
510
33,260
35%
16,755
335
21,780
53%
22,620
450
29,370
35%
14,690
295
19,115
53%
19,830
395
25,755
35%
13,080
260
16,980
53%
17,660
355
22,985
35%
10,710
215
13,935
53%
14,460
290
18,810
35%
9,855
200
12,855
54%
13,305
265
17,280
35%
8,930
180
11,630
54%
12,005
240
15,605
34%
8,160
165
10,635
54%
11,015
220
14,315
35%
7,240
145
9,415
54%
9,775
195
12,700
35%
6,700
135
8,725
54%
9,045
180
11,745
35%
6,355
130
8,305
55%
8,580
170
11,130
35%
5,970
120
7,770
55%
8,060
160
10,460
35%
5,425
110
7,075
55%
7,325
145
9,500
35%
5,040
100
6,540
55%
6,805
135
8,830
35%
4,790
95
6,215
52%
6,465
130
8,415
35%
958
4,560
90
5,910
52%
6,155
125
8,030
35%
912
115 of 115
20% Revision on 2006 Scale which was provided as Lumpsum Salary Allowance from January 2011
Min.
45% Revision on 1999 Scale which was provided as Lumpsum Salary Allowance from January 2005 till June 2008
%
Pay Scale 2006
(July)
Janaury 2009
Pay Scale1999
(July)
35% Revision on 2006 Scale which was provided as Lumpsum Salary Allowance from January 2009 till July 2010
7
Janaury 2005
3,794
3,351
2,938
2,616
2,142
1,971
1,786
1,632
1,448
1,340
1,271
1,194
1,085
1,008