UPA approves pay commission to benefit 80 lakh government employees and pensioners
The poll sop opera continues unabated as the ruling UPA dispensation widens the ambit of its vote bank for the 2014 elections.
Prime Minister Manmohan Singh on Wednesday approved the constitution of the 7th Central Pay Commission, which will benefit as many as 80 lakh central government employees and pensioners, with an eye on votes in a crucial election year.
Prime Minister Manmohan Singh approved the constitution of the 7th pay commission. Its By Mail Today Bureau in New Delhi recommendations are likely to be implemented with effect from January 1, 2016," Finance Minister P. Chidambaram said on Wednesday.
The 6th pay commission was constituted in 2006 and in the normal course, the government is expected to announce the next pay commission after a gap of 10 years. The fifth came in 1996. But with the UPA government's image battered by a spate of corruption scandals, the date has been advanced by two years in order to recover some lost ground with the electorate.
The decision comes close on the heels of the hike in dearness allowance, to 90 per cent, for government staff announced on Friday. The fact that the state governments also follow the Centre in hiking their employees' pay means the announcement impacts many more people beyond the 50 lakh employees and 30 lakh pensioners of the central government.
The government justified the early constitution of the commission on the ground that it will take around two years to submit its recommendations. The 6th pay commission, for example, was constituted in October 2006 and the Centre implemented it ahead of the 2009 Lok Sabha elections, showering central government employees with a big pay hike bonanza.
The 6th pay commission had recommended a 20 to 40 per cent jump in salary. This cheered the employees, but wreaked havoc with the government's finances as the fiscal deficit soared to 6 per cent of the gross domestic product (GDP). The consequent burden of arrears on the central government was Rs 28,160 crore on a salary base of Rs 44,360 crore. Throw in another Rs 73,000 crore, forked out by the Indian Railways as arrears and to its vast swathe of pensioners, and you have a deadly burden on the exchequer.
The cash-strapped government had disbursed the arrears in two instalments with 40 per cent given out in 2008-09 and 60 per cent in 2009-10. The arrears contributed significantly to the Centre overshooting its target in 2008-09, ending the year with a fiscal deficit of 6 per cent of GDP against the budgeted 2.5 per cent.
The fiscal deficit rose to 6.4 per cent of GDP in 2009-10 as pay commission arrears pushed up the expenditure at a time when the government was battling slowdown in revenues. With the 7th pay commission, the situation is headed in the same direction and the country will eventually have to face the music of this populism.
The setting up of the commission, whose recommendations will also benefit those in defence and railways, comes ahead of the Assembly elections in five states in November and the general elections in May 2014. Planning Commission member Arun Maira was quite candid on the issue, terming the constitution of the 7th pay commission as "an election force".
"It is an interesting situation since it is election time," he said when asked about the timing of the decision. "You need to get elected otherwise you cannot do what you want to do."
The names of the chairperson and members of the newly constituted commission and its terms of reference will be finalised shortly after consultation with major stakeholders.
Armed forces want fair representation in panel
By Mail Today Bureau in New Delhi
The demand for a separate commission for defence forces was abandoned on the ground that it may prove counter-productive
The armed forces have sought fair representation in the 7th Central Pay Commission after a bitter previous experience that had created resentment among the rank and file, even as they have given up demand for a separate pay panel for the services.
IAF chief NAK Browne, who is also the chairman of the Chiefs of Staff Committee, has written to Defence Minister A.K. Antony, demanding that representatives from the armed forces be made members in the pay commission with the authority to take decision.
The letter, written on September 13, stated: "We want full representation on the Central Pay Commission because it may not be expected to fully grasp unique challenges of military services."
The armed forces have also demanded that the defence minister press for justified demands of the services. Sources said the letter was written after extensive consultations among the three service chiefs. Army chief General Bikram Singh and Navy chief Admiral D.K. Joshi were taken on board and studies were held over a period of time to address concerns of the armed forces.
The reason for abandoning the demand for a separate pay commission was that it was felt it will prove counter-productive. The letter said that through adequate representation, the armed forces will be able to address the issues concerning pay parity, military service pay, and rank pay issues.
"Analysis of the experience of departmental committees vis-a-vis central pay commissions indicates that a separate pay commission may not necessarily benefit the services as anomalies are invariably bound to arise in both cases," Browne's three-page letter titled 'Common VII Central Pay Commission' mentioned.
The IAF chief admitted: "Central pay commissions, to a large extent, have been judicious and fair in their dispensation towards armed forces."
The armed forces, in 2008, had favoured a separate pay commission which was also recommended to the group of secretaries. The Prime Minister's Office in 2009 informed the defence ministry that the armed forces personnel would henceforth have a separate pay commission, which is delinked from the civilian pay panel.
The demand for having a separate pay commission for the services arose following widespread resentment over the recommendations of the 6th pay commission. Now, though, the government has announced setting up of the 7th pay commission, it is not clear how the armed forces' demand would be accommodated.
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