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Revised pay matrix for CPSEs soon; employees could face salary cut

Failure in meeting the revised performance-related pay criteria will not only mean rating downgrades for the CPSEs but also cut in the variable pay of its employees

twitter-logoBusinessToday.In | February 22, 2021 | Updated 17:50 IST
Revised pay matrix for CPSEs soon; employees could face salary cut
With revised matrix for PRP, government aims to include these criteria in customary MoUs being signed between PSUs and administrative ministries in current fiscal year itself

The central public sector enterprises (CPSEs) employees may face a steep reduction in performance-related pay (PRP) if a public sector company fails to meet certain targets like m-cap, return on capital, asset-turnover ratio and Capex and production targets.

With revised matrix for the PRP, the government aims to include these criteria in the customary Memorandum of Understanding (MoUs) being signed between PSUs and administrative ministries in the current fiscal year itself, reported The Financial Express.

The Centre's initiative is aimed at attracting investment in these CPSEs as the government prepares to privatise them in the coming years.

As per the revised goals being framed for CPSEs, of the total assigned marks of 100, asset turnover, return on capital employed, and m-cap will carry 5 marks each. The company's EBITDA as a percentage of revenue will account for 10 marks. The companies achieving the production target will get 20 marks instead of 10 earlier.

The failure in meeting the revised criteria will not only mean rating downgrades for the CPSEs but also cut in the variable pay of its employees.

As per the current rules, CPSEs can fix the performance-related pay at 150 per cent of the basic salary for CMDs and 40 per cent of the basic pay of the lowest grade staff. The companies achieving 'excellent' performance (over 90 score) are eligible for 100 per cent PRP. Those scoring 'very good' and 'good' get 80 per cent and 60 per cent PRP.

As per the official data, the salary bill of around 250 CPSEs, which employ 15 lakh people, is worth around Rs 1.53 lakh crore (FY19 data). The government has set a disinvestment target of Rs 1.75 lakh crore for 2021-22. This is lower than Rs 2.1 lakh crore it hoped to garner from disinvestment in 2020-21.

Adverse market conditions because of the pandemic affected the government's disinvestment plans in 2020-21, and it is expected to fall short of the target by a long way. The strategic sale of IDBI Bank, BPCL, Shipping Corp, Container Corporation, Neelachal Ispat Nigam Ltd, Pawan Hans, Air India, among others, would be completed in FY22.

Also read: Budget 2021: Govt sets lower disinvestment target of Rs 1.75 lakh crore for FY22

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