3 May 2016

** Indian service chiefs earn less than top US generals, reveals new data

Apr 29, 2016

An article in a leading English daily published on 27 April 2016, titled “Our service chiefs may earn more than US generals”, states: “For the first time, the Indian Army chief and his counterparts in the IAF and the Navy will draw more salary than the top general and equivalent in the US based on purchasing power parity (PPP) terms when the recommendations of the 7th Central Pay Commission are implemented, said a defence ministry thinktank, on the pay packets of the Army chiefs and equivalent in the US, the UK and India said a general and equivalent in the US was paid $181,500 per annum (in PPP terms). The salary in the UK for similar ranks was $269,868. In India, the three services chiefs, who enjoy pay equivalent to the Cabinet secretary, received $140,520. If the recommendations of the 7th pay panel are implemented, the Indian Army chief’s annual salary will jump to $189,482 (in PPP terms), almost $8,000 more than what a general and equivalent ranks draw in the US. The huge salary hikes will apply equally to civilian officers too."

This report is incorrect and so is the reference in it to the IDSA paper. 

The review of pay, allowances and pensions for all Central government employees in India takes place once in every 10 years, while the review of Military Compensations in the US is done on a quadrennial basis. 

In India, the 10 yearly exercise is manifesting in the year 2016 (after 2006), in the US, the last review took place in 2012 and the next planned review in 2016 has been replaced by Military Compensation and Retirement Modernisation Commission which gave its report in 2015.

IDSA had undertaken a study in 2015 on the “Nature, Quantum and Components of Defense Expenditure & Defence Pensions” in order to obtain an independent feedback from a non-partisan body, dedicated to research and policy in def and security. In the study, the comparison of salaries has also been done on the basis of Purchasing Power Parity (PPP). However, the IDSA study itself states that the comparison of salaries in PPP terms pre-supposes identical basket of needs to be filled and hence is not a fair comparison.

Factors like longer terms of engagement, assured jobs post retirement, higher pensions and social security schemes have not been factored in the comparison made by IDSA. Moreover, the comparison based on PPP is equally applicable to the civilian government employees also. In fact, since the per capita incomes in US and UK are many times higher than India, comparison of salaries based on PPP shall pose a distorted outcome if done between a developed country (US & UK) and a developing country (India).

The military pensions in the US vary between 50 to 100 per cent of pay. While the pension at 20 years qualifying service is at 50 per cent of pay, the same increases by 2.5 per cent for every additional year. Thus for 40 years’ qualifying service, the pension would amount to 100 per cent of pay as would be in case of Service Chiefs. Thus, even at current rates, the US Service Chief drawn a pension of $18394.53, while the Service Chiefs in India shall draw $1923.08 (absolute value) or $7856.69 (as per PPP).

Comparison of current salaries brings out the stark disparity in absolute salaries between the two countries, for similarly ranking officials which, even when compared by PPP, is lower in India. Another validation provided by this comparison is that military personnel in the US draw higher salaries and pensions than their civilian counterparts as well and the relative difference between the salaries of civilians in US and India is much lower than the relative difference in salaries between military personnel in US and India.

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