Productivity Linked Bonus for Railway Employees

Cabinet Decision

   The Union Cabinet today approved the proposal of the Ministry of Railways for payment of Productivity Linked Bonus (PLB) equivalent to 75 days’ wages for the financial year 2008-2009 for all eligible non-gazetted Railway employees (excluding RPF/RPSF personnel).

            The salient features of the PLB scheme evolved as a result of review of the scheme and approval of the Cabinet on 23.09.2000 and applied for making payment for the financial years 1998-99, 1999-2000, 2000-01 and 2001-02 are as under :-

a)       The output for a year is reckoned by the  equated net  tonne kilometres by adding together:-

(i)                   Total goods revenue net tonne kilometres.

(ii)                 Non-suburban passenger kilometres converted by a factor of 0.076.

(iii)                Suburban passenger kilometres converted by a factor of 0.053.

b)       The input is taken as the non-gazetted staff strength (excluding RPF/RPSF personnel), increased by the incremental increase/decrease in capital during the year.  Incremental capital is confined to Rolling Stock utilised for movement of trains.  The measurement of capital is in terms of  tractive effort (Diesel Electric & Electric) for Locomotives, carrying  capacity for  Wagons and seating  capacity for Coaches.  The tractive effort of  locomotives and carrying capacity of Wagons/Coaches together are given equal weight.  The relative weight of wagons and coaches is determined on the basis of ratio of goods  train kilometres and passenger train kilometres  in the total  train  kilometres.  Based on this principal, the relative weights are 0.50 for Tractive Effort, 0.20 for Wagon Capacity and 0.30 for Seating Capacity.  Thus, the  percentage  increase in  Tractive Effort  over the  base year is multiplied by 0.50; similarly the  percentage increase in Wagon Capacity and Seating Capacity is multiplied by 0.20 and 0.30 respectively and added up to arrive at the total percentage increase in capital.  The labour input i.e. non-gazetted staff strength is then increased to the extent of this percentage increase in the incremental capital.

c)       The ratio of the output to the input is the productivity index for the year.

Background :

            Railways were the first departmental undertaking of the Government of India wherein the concept of PLB was introduced.  The main consideration at that time was the important role of the Railways as an infrastructural support in the performance of the economy as a whole.  In the  overall context of Railway working, it was considered desirable to introduce the concept of PLB as against the concept of Bonus on the lines of ‘The Payment of Bonus Act – 1965’.  Even though the Payment of Bonus Act does not apply to the Railways, yet the broad principles contained in that Act were kept in view for the purpose of determining the “Wage/Pay Ceiling:, definition of  ‘Salary’/’Wage’, etc.  The PLB Scheme for the Railways came into force from the year 1979-80 onwards and was evolved in consultation with the two  recognised federations viz.  All India Railwaymen’s Federation and National Federation of Indian Railwaymen and with the approval of the Cabinet.  The scheme envisages  a review  every three years.

Implementation Strategy and targets:

            Sixth Central Pay Commission in para 4.4.5 of their report had recommended that all Departments should ultimately replace the existing productivity linked bonus schemes with Performance Related Incentive Scheme (PRIS) and also that in places where PLB is applicable and it is not found feasible to implement PRIS immediately, the existing productivity linked bonus schemes may be continued in a modified manner where the formula for computing the bonus has a direct nexus with the increased profitability/productivity under well-defined financial parameters.  In respect of the  Railway’s PLB scheme, the VIth CPC in Para 4.412 of their report have opined that a new formula for computing PLB that is based on financial parameters and where profit is computed  as per the established principles of commercial accounting, wages with appropriate adjustments for increases, the impact of the capital investment, element of subsidy, etc. needs to be devised in case the PRIS is not implemented immediately in Ministry of Railways.

            The Government on the said recommendations of the Sixth CPC relating to the PLB schemes has decided to examine the same  separately.  However, the recommendation regarding PRIS has been accepted by the Government.  Thus individual Ministries/Departments are required to devise PRIS in accordance with their own organizational structure and need as per guidelines to be issued by the nodal Ministry.  Since no guidelines on PRIS have been received so far and as such PLB scheme is to continue till introduction of PRIS.

Major Impact

            This will be the highest PLB payment ever to be made by Railways.  PLB is based on the productivity indices reflecting the performance of the Railways.

Expenditure involved:

            The financial implication of payment of 75 days’ PLB to  railway employees has been estimated to be Rs.889 crores.  The wage calculation ceiling prescribed for payment of PLB to the  eligible non-gazetted railway employees (excluding RPF/RPSF personnel) is Rs.3500/- p.m.

Number of  beneficiaries:

About 13.05 lakh non-gazetted  Railway employees are likely to benefit from the decision.(PIB)