Rank Pay

Rank-Pay, is a scheme implemented by the Rajiv Gandhi led Indian National Congress (I) Government in 1986, in the wake of 4th Central Pay Commission(4CPC), that reduced the basic-pay, or grade pay, of seven armed armed officers ranks of 2nd Lieutenant, Lieutenant, captain, majors, lt-colonel, colonels, and brigadiers, and their equivalent in the air-force and the Indian Navy by fixed amounts designated as 'rank-pay'. The reduction in the basic-pay, the established basis of determining rank equivalences between armed forces officers and civilian and police counterparts, altered long established historical grade-pay equivalences or parities between armed forces officers and police officer, which was an accepted principle since 1947 for determination of armed forces grade pay, and which was 'further cemented' in 1973, by the 3 Central Pay Commission(3CPC). The reduction in grade-pay apart from causing asymmetries in rank equivalence between the officers from the Indian police service and armed forces affected the basic pay, allowances, entitlements, promotion prospects, status, and pension of thousands of officers in the service in January 1986, and the decades after that. In 2012, reduction in armed forces grade-pay, which was a subject of litigation since 1994, was declared illegal by the Supreme Court of India, which in a landmark judgement ordered the government to pay arrears to the more than 20,000 affected officers of the armed forces.

The 'rank-pay' scheme apart from provoking contentious litigation, was one of the causes that fueled protracted protest by veterans over One Rank, One Pension (OROP); and, in the estimate of former chiefs of the armed forces, the degradation of armed forces ranks which rank-pay deductions from basic pay caused, affected armed forces morale and national security, about which they wrote letters to the Prime minister, including Narendra Modi. The legacy of reduction of grade-pay of armed forces lingers, and has variously affected the outcomes of the 5th, 6th and 7th Central Pay Commission.

...
Wikipedia