Friday, December 29, 2006

Fill Questionnaire now

As already stated here that Pay Commission has invited public views and a questionnaire has been prepared by the Commission in this regard which has to be filled up and to be send to the sixth pay commision till 31st December, 2006.
This last date is now some days away and those of you have not submitted it till now, kindly fill this form and submit now. If you have a view or you want to express yourself regarding pay related issues then it is a good opportunity. If all of you reply then your voice will be heard in the Pay Commission, otherwise you may miss an opportunity.
National Informatics Centre (NIC) has developed an online version of this questionnaire for the Pay Commission which can be filled up online, this can be filled up in bits atnd peaces and you can take you time to think about any particular question. But you have to register first at the portal. You can click on the image and you will be redirected to the online version.

Tuesday, December 26, 2006

Pay Commission Studying Economic Condition of States

According to the a news article published in the 'Dainik Jagran', the Sixth Central Pay Commission has started an exercise to learn about the fallout of the implementations of Fifth Pay Commission recommendations in the states after getting inputs from the Central Government about this. States got nearly bankrupt after the implementations of the Fifth Pay Commission and Central Government had to intervene and had to help the states to recover from the economical draught.

The Sixth Pay commission is setup to revise the pay scale of the Central Govt. employees only and its recommendations are implementable to the Central Govt. employees only and for those who are under the control of the Central Govt. States are not bound to follow the recommendations of the Central Pay Commission. But by the convention, State Govt. increase pay of their employees on the pattern of the Central Government pay scales. Therefore, Pay commission is alert this time in regards to the implementation of its report by the states.

As per the story, the Pay Commission has asked the states for important information. A questionnaire has been sent to the states in which details of the effects of the fifth pay commission in total and on per years year basis has been asked.

In the questionnaire, apart from the overall impact, expenditure on the pay, allowances and pensions for last five years, GroupWise no. of employees and pensioners in the local bodies, Government and autonomous institutions has been asked. The states are also to tell whether they have made a law for the fiscal deficit or not. The states has to provide position of the balance of the fund, income and expenditure statement and advance analysis of treasury from the year 2007-07 to 2015-16. The pay commission is doing all this exercise to avoid the same conditions at the time of the implementation of the fifth pay commission.

Fifth pay commission was setup in the year 1994 and its recommendations were implemented from the January 1997 and after the implementations in the year 1997, the states face acute shortage of the fund as around 90% of the revenue started to consumed by the pay bills only. In the year 2000 some 13 states were not in position to provide salary to their employees. At that time central government had to help the states financially.

Source : Dainik Jagran

Saturday, December 23, 2006

Defence Ministrer wants more pay

Banagalore 22/12/06

Worried over brain-drain, Defence Minister, Mr. A.K. Antony on Friday said the Government will urge the new Pay Commission to hike the salaries of employees of the armed forces and scientists of the Defence Research and Development Organisation (DRDO)

It is to be recalled that recently it was disclosed by the Army and Air Force that there is a huge shortage of the officers and those officers in the service are demanding to leave the forces and want to work for corporate. Except for the love to the country and dedication to work directly to the country nothing else is attractive about the armed forces to join. Bright young students of the Universities are joining corporate world for better opportunities and pay packaets.

It is not clear whether Minister wants more pay for Scinetists of the DRDO only or he wants more pay for scientists of all other 500+ scientific organisations.

The statement of the Minister also reflect that somewhere in the Governemnt corridor it has been learnt that to attract best tallent, pay structure and service conditions has to improve.

Tuesday, December 05, 2006

India must pay for good governance

Many of this blog readers has asked me to include this brilliant artivle by Sh. Sumit K. Majumdar, plulished in the Hindu Business Line dated June 23, 2006. I am reproducing the same article here to read be all. This is certify that the original artivle was posted in the Hindu and I am just reproducing with thanks.

India must pay for good governance

Sumit K. Majumdar

In the last 25 years, civil service salaries have risen substantially. Yet, they are no comparison to private sector wage levels that have risen a hundred times in the same timeframe. The price of such disparities is psychological dysfunction among civil servants who are capable and highly motivated. India cannot short-change good governance. The prognosis for India's governance looks bleak, as good candidates for superior civil service jobs seek alternative careers.

Pegged at extraordinarily generous rates by Lord Cornwallis so as to eradicate corruption indulged in by the employees of East India Company, the salary scales of civil servants provided the motivation for generations of British and Indian men to seek employment in India's civil services.

The Indian Civil Service (ICS) was one of the best-paid jobs on earth. In 1805, a Collector of Madras Presidency was paid Rs 2,500 a month — a gigantic sum by today's standards. If prices have risen by 200 times in the last two centuries, then that salary today is worth at least Rs 500,000.

As late as 1980, when the last serving ICS officer, N. K. Mukherjee, retired as the Cabinet Secretary, his monthly salary of Rs 4,000, though having stayed static for that level of appointment for two centuries, was adequate. Private sector salaries were such that senior functionaries were paid about Rs 10,000 a month. In the last 25 years, civil service salaries have risen substantially. The Cabinet Secretary is now paid ten times what his previous generation counterpart was. Nevertheless, what has risen more substantially is the level of salaries paid in India's private sector. They have risen by a hundred times in the last 25 years. The wage disparity is huge and has psychological consequences.

Facts from Yesterday

In 1947, a mid-level District Collector would have been paid Rs 2,000 a month while his Commissioner would draw Rs 3,500. The Chief Secretary of the Madras Presidency would be paid Rs 3,750. An ICS Member of the Governor's Executive Council would be paid Rs 5,000 a month, while the Governor of UP was paid Rs 10,000. For 1947, these were large sums.

At that time the Reserve Bank of India Governor was paid Rs 7,500 a month, while a Secretary and Treasurer of the Imperial Bank, the precursor of the State Bank of India, was paid Rs 4,000. Comparably, the best private sector company would pay its general manager Rs 5,000 and its Managing Director Rs 6,000 a month. Government pay was outstandingly handsome.

Some Facts Today

Today a 35-year-old District Collector is paid Rs 20,000 a month, a 50-year-old Secretary to a State government gets Rs 34,000 and the Chief Secretary Rs 38,000. The RBI Governor and the SBI Chairman do just a bit better at about Rs 44,000.Now, look at private sector salaries. A brand new graduate joining a call centre gets Rs 20,000, while a 30-year-old Systems Analyst is paid Rs 60,000 per month. What will motivate youth to join in national governance?

At upper levels the situation is extraordinary. A private sector general manager is paid Rs 300,000 a month. Compare the salary of his college mate who got into the IAS. But look at the disparity between the salary of an Executive Director of a private sector bank, probably paid about Rs 10,00,000 a month, and that of the RBI Governor.

Or, for that matter between that of the CEO of a private sector company, probably paid Rs 15,00,000 a month, and that of the Chief Secretary of a State. In the financial sector the disparity ratio is over 20; in the last case the disparity ratio is 40!

Challenges of Economic Emancipation

In the last decade India has embarked on a journey of liberalisation in which the role of market is absolute. The private sector salary rates represent the forces of demand and supply. Price and wage controls cannot be resorted to because the capping of private sector wages leads to retardation of incentive to work. Controls have dysfunctional consequences, as witnessed for a major part of India's contemporary history. The supply side revolution, well under way, will be stopped in its tracks if controls are applied. Yet, as British mathematician-philosopher Alfred North Whitehead had remarked: "The major advances in civilisation are processes, which all but wreck the societies in which they occur." The runway wage inflation in the private sector, reflecting the working of a free-market economy, can have dysfunctional consequences and wreck the process of societal evolution. With that the quality of governance would go downhill. The question is how much is to be paid for good governance? Very large amounts. Lord Cornwallis had recognised this in the 1790s. How do we handle the conundrum today? If today's civil servants are paid a tenth or less of what their private sector colleagues earn, who can blame them if they are de-motivated?

If India wants good governance it has to pay for it. If, following the efficiency wages hypothesis, low wages will attract only unworthy candidates. Thus, the prognosis for India's governance looks bleak, as good candidates for superior civil service jobs seek alternative careers.

Pay Commissions

Initial thoughts on a pay commission would be that its report would be simple. It would simply increase all government sector salaries at least ten times. While that would be easy, it would be disastrous for the government that would disappear under its fiscal obligations.

The burden of supporting several million employees at vastly enhanced rates of pay is a recipe for disaster. Yet, this potential liability has to be met head-on and budgeted for. A way out is the significant shrinkage of employment in Groups B, C and D. This would be impossible for reasons political.

A pay commission could also recommend that a large fund be set up to implement golden handshakes; this amount be treated as an investment and accordingly budgeted for. The subsequent reduction in manpower would lead to significant savings.

The next Pay Commission should address the disparities in salaries. It also needs to increase by a factor of at least ten the salaries of Group A employees. Even then the senior civil servants will be earning a third or half of their private sector counterparts. It must deal with the re-structuring of the government machinery.

The price of wage disparities is psychological dysfunction among civil servants who are capable and motivated. As the supply of capable and motivated civil servants dwindles, the price could be anarchy. Serious thought must be given to the question of how much India pays for good governance.

(The author is Professor of Technology Strategy, University of Texas at Dallas. He can be contacted at


Saturday, November 25, 2006

Pay Commssion asked to give report ealry : Chidambaram


The Finance Minister Sh. Chidambaram has said in Loksabha that Sixth Pay Commission has been asked to give its report as soon as possible. He said that the power to take decision regarding 'interim relief' has been vested with the Pay Commission itself and any decision regarding the interim relief will be taken by the Pay Commission itself. The Finanace Minister denied in Loksabha that Sixth Pay Commission is setup late in comparison to the Fifth Pay Commission. He said that normally pay commissions are setup after a gap of 11 to 13 years and Sixth Pay Commission is setup just after 12 years of the last pay commission i.e. Fifth Pay Commission.

Saturday, November 04, 2006

Six Pay Commission Address

Following is the address for communication to the Sixth Pay Commission.

Sixth Central Pay Commission2nd Floor, ICADR Building ,Plot No.6, Vasant Kunj Institutional Area, Phase IINew Delhi-110070.

or at:

PO Bag No.001, Vasant Kunj Post Office, New Delhi-110070

E-mail :

Pay Cmmission invites public views

Suggestions & Comments invited

Six pay commission invites all interested persones, including members of the public, poeple's representatives, consumer assoicaitions, staff assosiations, State/UT Governments, Ministries/Departments are invited to send their views to the Commission by 31 st December, 2006.

A questionnaire has been prepared to facilitate response on the items of specific interest to the Commission. The same can be accessed at the above mentioned web sites. In the meantime, you may download the questionnaire from page and submit the same at
by post at the following address:
Sixth Central Pay Commission2nd Floor, ICADR Building ,Plot No.6, Vasant Kunj Institutional Area, Phase IINew Delhi-110070.
or at:
PO Bag No.001, Vasant Kunj Post Office, New Delhi-110070

Wednesday, November 01, 2006

Interim Relief by Next year?

Will the much awaited Interim Relif be announce by next year? Yes, it seems that this will be announce early next year because Government has enthrusted the Sixth Pay Commission to annouce any Interim Relief if it wants to provide any interim relief. It will take around 2 months for Pay Commission to have a proper secretariat and proper data to decide on interim relief. Therefore, there are chances that interim relief may be announce by the ealry next year.

Friday, October 06, 2006

Constitution & Terms Of Reference of Pay Commission

Thursday 5 October, 2006
Government of India has announced constitution & terms of reference of the Sixth Central Pay Commission. In a notification issued by the Department of Expenditure, Ministry of Finance here today, the Commission will comprise of the following: -

  1. Chairman - Mr. Justice B.N. Srikrishna
  2. Member - Prof. Ravindra Dholakia
  3. Member - Shri J.S. Mathur
  4. Member-Secretary - Smt. Sushama Nath

The terms of reference of the Commission will be as follows: -

  • To examine the principles, the date of effect thereof, that should govern the structure of pay, allowances and other facilities / benefits, whether in cash or in kind, to the categories of employees consisting of : (i) Central government employees – industrial and non-industrial (ii) Personnel belonging to the All India Services (iii) Personnel belonging to the Armed Forces (iv) Personnel of the Union Territories (v) Officers and employees of the Indian Audit and Accounts Department; and (vi) Officers and employees of the regulatory bodies set up under Acts of Parliament.
  • To transform the Central Government Organisations into modern, professional and citizen-friendly entities that are dedicated to the service of the people.
  • To work out a comprehensive pay package for the categories of Central Government employees mentioned at (A) that is suitably linked to promoting efficiency, productivity and economy through rationalization of structures, organisations, systems and processes within the Government, with a view to leveraging economy, accountability, responsibility, transparency, assimilation of technology and discipline.
  • To harmonize the functioning of the Central Government Organisations with the demands of the emerging global economic scenario. This would also take in account, among other relevant factors, the totality of benefits available to the employees, need of rationalization and simplification thereof, the prevailing pay structure and retirement benefits available under the Central Public Sector Undertakings, the economic conditions in the country, the need to observe fiscal prudence in the management of the economy, the resources of the Central Government and the demands thereon on account of economic and social development, defence, national security and the global economic scenario, and the impact upon the finances of the States if the recommendations are adopted by the States.
  • To examine the principles which should govern the structure of pension, death-cum-retirement gratuity, family pension and other terminal or recurring benefits having financial implications to the present and former Central Government employees appointed before January 1, 2004.
  • To make recommendations with respect to the general principles, financial parameters and conditions which should govern payment of bonus and the desirability and feasibility of introducing Productivity Linked Incentive Scheme in place of the existing ad hoc bonus scheme in various Departments and to recommend specific formulae for determining the productivity index and other related parameters.
  • To examine desirability and the need to sanction any interim relief till the time the recommendations of the Commission are made and accepted by the Government.

The Commission will devise its own procedure and may appoint such Advisers, institutional consultants and experts, as it may consider necessary for any particular purpose. It may call for such information and take such evidence, as it may consider necessary. Ministries and Departments of the Government of India will furnish such information and documents and other assistance as may be required by the Commission. The Government of India trusts that State Governments, Service Associations and others concerned will extend to the Commission their fullest cooperation and assistance.

The Government of India have been considering for some time past the changes that have taken place in the structure of emoluments of Government employees over the years. Conditions have also changed in several respects since the last Pay Commission made its Report in 1997. The Commission will make its recommendations within 18 months of the date of its constitution. It may consider, if necessary, sending reports on any of the matters as and when the recommendations are finalized. The Commission will have its headquarters in Delhi.

Please see the Gazette notification here.

Saturday, September 16, 2006

UP Govt. for speedy consultation of Pay Commission

UP Government has given answer to a question in State Assembly that Government will decide early on Sixth Pay Commission recommendation as and when received from the the Central Government.
In a reply to the question by Mr. Jagdambika Pal in question hour, the State Minister for Finanace , Mr. Shahid Manjoo said that right from the year 1986 the the salaries to the employees are being given at par with the Central government. After 4th Pay commissions recommendations in the year 1986, in the year 1988 Government decided to accept the recommendations. And in ctober, 1997 Government setup a state Salary Committe whose recommendations were accepted by the Government. So as and when the Sixth Pay Commission's recommendations will reach to the State Government, the Govt. will decide accordingly.

Tuesday, September 12, 2006

Interim Relief Rumour

It is a very strong rumour in the Babu circle (Babudom!) that Government is planning for a 10% interim relief alongwith Notification of constituation of Sixth Pay Commission. Some rumour say interim relief will be 5%. But I think it is the Babu's wish list and they want that some interim relief should be announced, therefore this rumour is gaining ground.

Tuesday, September 05, 2006

Government Constituted Sixth Pay Commission

September 02, 2006: True to the Media reports Government finally constituted the Sixth Pay Commission and Former SC judge Sri Krishna to head pay commission.

The Government on Saturday appointed former Supreme Court judge Justice B N Srikrishna as Chairman of the Sixth Pay Commission that will go into revision of wages for 33 lakh Central government employees. An official announcement said the pay commission would have three other members, apart from its Chairman.The members are -- IIM professor Ravindra Dholakia, former additional secretary budget and member secretary of Expenditure Reforms Commission J S Mathur and S Nath, who will be the member secretaries of the pay panel.
Srikrishna, a former judge of the Bombay High Court, had headed the inquiry commission that went into the Mumbai communal violence in 1993 in the aftermath of Babri Masjid demolition.The Cabinet cleared the proposal for setting up the sixth pay commission in July.

The fifth pay commission was also headed by a former Supreme Court judge, Ratnavel Pandian. As per the Cabinet decision in July, the three-member sixth pay commission will be given 18 months to submit its recommendations. The commission will also examine the need and quantum to sanction interim relief to the employees.

The Cabinet decision to set up the sixth pay commission came five months after the announcement by Prime Minister Manmohan Singh in this regard. The Centre had consulted the state governments, of which 16 had sent comments.

While BJP-ruled Gujarat and Madhya Pradesh totally opposed its setting up, six other states -- Karnataka, Assam, Tripura, Orissa, Manipur and Nagaland -- wanted the Centre to share the burden, Parliamentary Affairs Minister P R Dasmunsi had said after the Cabinet meeting.

The previous fifth pay commission, which was implemented in 1996-97, cost the exchequer additional Rs 17,000 crore yearly and had put a heavy burden on states, forcing the then finance minister to come out with a financial package to bail them out.

The sixth pay commission is widely expected to cost Rs 20,000 crore to the Centre's exchequer annually. The prime minister had, however, said the move would not hurt the fiscal situation and cause apprehension among foreign investors.

Saturday, September 02, 2006

Justice Srikrishna is Chairman for Pay Commission?

There is strong rumour and media speculation about decision of Central Government to appoint Retd. Justice Sri Krishna as Chairman to the Sixth Pay Commission. It is reported in the media that Government has decided to appoint him and other member of the commission will be decided later with consultation to the Justice Sri Krishna.
Notification about constitution of the Sixth Pay Commission is expected soon and it is learnt that the name of the Justice Sri Krishna is refered by Chief Justice India Sh. Sabharwal.

Friday, September 01, 2006

Pay Commision History

Pay Commissions are periodically constituted to examine various issues such as pay and allowances, retirement benefits, conditions of service, promotion policies, etc. of the Central Government employees. There is no stipulation regarding any specific time period for constitution of a Pay Commission for Central Government employees. Till now five Central Pay Commissions have been constituted whose details are as below:-
First Pay Commission
  • Date of Appointed : May, 1946
  • Date of Submission of Report : May,1947
  • Financial Impact (Rs. in Cr.) : NA
Second Pay Commission
  • Date of Appointed : August, 1957
  • Date of Submission of Report : August 1959
  • Financial Impact (Rs. in Cr.) : 39.62
Third Pay Commission
  • Date of Appointed : April, 1970
  • Date of Submission of Report : March, 1973
  • Financial Impact (Rs. in Cr.) : 144.60
Fourth Pay Commission
  • Date of Appointed : June, 1983
  • Date of Submission of Report : 3 Reports submitted in June, 1986; Dec. 1986 and May, 1987
  • Financial Impact (Rs. in Cr.) : 1282
Fifth Pay Commission
  • Date of Appointed : April, 1994
  • Date of Submission of Report : January, 1997
  • Financial Impact (Rs. in Cr.) : 17,000
Thus successive Central Pay Commissions were set up in the past at intervals of 10 to 13 years. The last Central Pay Commission was constituted in April, 1994.
Source : Press Information Bureau, Govt. of India

Tuesday, August 29, 2006

MP increase their own salary

Recently MPs in Parliament increased their own salary. This is unique in the sense that MPs are only people who can increase thier own salary. Parliament has unanimously pased a bill to increase hefty amount in MPs salary and other expenses. Only token opposition was done left parties MPs.

Whenever DA is increased by the Government, it is a ritual to call the increase in DA as 'Additional burden' by Hon. Finance Minister and in every year budget ever Finance Minister rememenrs at least once that how badly economy has been after Fifth Pay Commission, but no a single word is said by anybody when MPs increase their salary. Now Govt. did not mentioned how much burden it cost to the nation.

Thursday, August 03, 2006

How much increase do you expect?

How much should be the increase and what should be given?

As you are aware that Government has decided to setup the Sixth Pay Commission. Now you may be thinking about how much should be the increase in your wages or what will be the recommendations of the said commission? So let us have a comment of you that what do you think should be the minimum increase in the pay or what should new to be done by the commission for example should the transport allowance be linked with the index of cost of Petroleum products?
So give your comment by clicking link below and let others also view your comments. By the time commission starts working we may have good opinion about what should be done.

Friday, July 28, 2006

Sixth Pay Commission may derail Economy

'The Fifth Pay Commission (set up in 1994) recommendations resulted in a Rs 530 billion payout by the government. The next (sixth) pay commission would effectively wind up Indian sovereignty.'
-- Arun Shourie, former Union minister for divestment, statistics and programme implementation

In an interview to the the former Union ministerSh. Arun shourie has opposed the setup of Sixth Pay Commission.
Read full interview here.

We must scrap Pay Commissions

'We must scrap Pay Commissions'
Bibek Debroy, secretary general, PHDCCI

July 24, 2006

Last week, the Manmohan Singh Cabinet set up the Sixth Pay Commission that will determine the wages of central government employees for the next 10 years.

India Inc has reacted strongly to the constitution of the new pay panel. Apex business bodies like the Confederation of Indian Industry (CII); the Federation of Indian Chambers of Commerce and Industry (FICCI); and the Punjab, Haryana and Delhi Chambers of Commerce and Industry (PHDCCI) argue that the new pay commission recommendations, when implemented, would stifle the country's economic growth.

The Fifth Pay Commission was set up in 1994. And when it was implemented in 1997, it created an additional burden of Rs 17,000 crore (Rs 170 billion) per year on the government's finances. Many state governments couldn't bear the burden of the hike at the time, forcing the central government to devise a financial bailout package for them.

So, why did the government hastily set up the Sixth Pay Commission? One expert who has voiced his concern on the new Commission is Bibek Debroy, secretary general, PHDCCI.

A wellknown economist, Dr Debroy served till last year as the director of Rajiv Gandhi Institute for Contemporary Studies in New Delhi.
In an exclusive interview with Managing Editor George Iype, Dr Debroy explains how damaging can the Sixth Pay Commission be for India.

Why do you think Prime Minister Singh decided to set up the Sixth Pay Commission?

That is something that the government has to answer. But the irony is that the government has set up the Sixth Pay Commission without implementing the recommendations of the Fifth Pay Commission. There were many measures that the Fifth Pay Commission had recommended: like downsizing the government and going forward in administrative reforms.

While recommendations on downsizing and wage increases linked to productivity were ignored, the increase in wages and salaries was implemented. Sadly, the government implemented the recommendations pertaining only to wages and salary hikes.

The state governments have also followed suit. The result was that the Fifth Pay Commission recommendations completely ravaged the finances of the central and state governments.

What will be the effect of the Sixth Pay Commission?

We do not know what will be the recommendations of the new Pay Commission. But I am sure it will increase inflation and stifle economic growth. Also, once the impact on states and other quasi-government bodies is factored in, the Sixth Pay Commission will cost 1.5 per cent of GDP, something India cannot really afford.

This represents regressive transfers from the poor of the country. The poor pay through higher taxes for a salary budget that could have been spent on physical and social infrastructure.

Do you think setting up the new Pay commission is a regressive move?

Yes, it is a regressive move. First of all, where does the money come from to give higher salaries to millions of government employees? The Pay Commission recommendations on salary increases benefit 4.2 million central government employees, and 20 million state government employees when the recommendations eventually trickle down to states. But this hike is paid for by the 380 million who work outside the government.

Soon after the implementation of the Fifth Pay Commission in 1997, the government had set up the 10th Expenditure Reforms Commission. It had also suggested that downsizing the government was the most urgent issue. What happened to that recommendation?

Look, a number of commissions like the last Pay Commission and Expenditure Reforms Commission had recommended downsizing the government. But nothing has been done on this front for long. Ironically, the central government claims that its workforce has reduced in the last few years. But it is all a sleight of hand.

The corporatisation of the BSNL (Bharat Sanchar Nigam Ltd) reduced the workforce in good numbers. But that is not the 'means' under which the workforce should be reduced. Actually, the number of employees in the government -- the central government and the states -- has not reduced.

Do you think autonomous bodies under the government are also eating into the exchequer? It is said there are more than 300 autonomous bodies under the central government and their cost of operation every year is around Rs 8,000 crore (Rs 80 billion).

All these autonomous bodies should be turned into self-financing bodies. They should only be given some capital expenditure to run.

Do you think there is political pressure behind the setting up of the Sixth Pay Commission? Especially from the Left parties?

Setting up the Pay commission was a collective political gambit. It is not just the Left parties alone that wanted the Commission. In fact, Prime Minister Manmohan Singh had announced the setting up of the commission in February without consulting the state governments. There was a consensus that the central government must consult the states before setting up the crucial commission, because if pay hikes are implemented for central employees, naturally the states have also to raise the salaries.

But only after the central government announced that it is setting up the Commission, did it start consulting the states. I think it is a political game by the Congress party itself. Maybe they are looking at elections in 2009. They may be thinking that it will favour them politically it they can execute the Sixth Pay Commission before the next general election.

Do you need India needs such commissions?

What is the need for a Pay Commission? It has an archaic model up. It was first set up in 1956. Since then we have religiously continued setting up the Pay Commissions! It is high time India scraped the system of setting up Pay Commissions. If public sector undertakings want to increase salaries to their employees, let them do it. Let us set up a collective bargaining mechanism instead.

What do you mean by collective bargaining?

Government employees do not come under the purview of either the Trade Union Act or the Industrial Dispute Act. Rule 7 of the Central Civil Services (Conduct) Rules, 1964, prohibits government employees from going on a strike. It effectively means that government employees do not have collective bargaining power which is available to workmen in other industries and in the private sector.

I feel government employees should be given collective bargaining rights. This will help them to argue for a wage hike in accordance with their performance and calibre and they can actively negotiate with the government as a matter of right.

The government should facilitate this by amending the Trade Union and the Industrial Dispute Acts. This will ensure that there would be no need for further pay commissions from time to time.

(This interviews was published in and taken with thnaks)
Published at

Tuesday, July 25, 2006

Govt decides to set up sixth pay commission

Govt decides to set up sixth pay commission

NEW DELHI: In a heart-warming gesture to lakhs of Central Government employees and pensioners, the Union Cabinet on Thursday gave its nod for setting up the Sixth Pay Commission with an 18-month tenure to submit its recommendations on wage revision.

Implementation of the recommendations of the yet-to-be-constituted three-member Commission, to be announced by Prime Minister Manmohan Singh in the next few days, is likely to cast an additional annual burden of about Rs. 20,000 crore on the Central exchequer, considering that the financial impact of the previous Commission was Rs. 17,000 crore.

Announcing the Cabinet's decision entailing far-reaching financial and political implications in view of the percolation effect on the States, Union Information and Broadcasting Minister Priya Ranjan Dasmunsi told newspersons that the Commission, like the previous five, would examine issues such as pay and allowances, service conditions, promotion policies, retirement benefits, inflation and standard of living of the Central staff.

"The Commission will also examine the desirability, need and quantum of interim relief, if any," he said.

Mr. Dasmunsi said the precise terms of reference of the Commission would be announced at the time of its constitution. It would comprise a Chairman in the rank of Minister of State, one part-time Member and one Member-Secretary in the rank of Secretary or Additional Secretary at the Centre.

The Minister pointed out that the decision to set up the Commission — five months after the Prime Minister's announcement — was taken keeping in mind the "long-standing demand of the employees and the opinion of State Governments" although the Twelfth Finance Commission advised doing so on a regular basis.

Of the 16 States that responded to the UPA Government's queries on the proposal, only two BJP-ruled States — Madhya Pradesh and Gujarat — were against the move, while Karnataka, Orissa, Jammu and Kashmir, Assam, Nagaland, Tripura and Manipur sought financial assistance for implementing the recommendations, said Mr. Dasmunshi. Mr. Dasmunsi said the views of the State Governments were sought primarily because once a decision was taken on salary revision for the Central staff, the States were expected to face similar demands from their employees.

The Twelfth Finance Commission, headed by former Reserve Bank of India Governor, C. Rangarajan, disfavoured setting up of such pay panels at regular intervals as the Fifth Pay Commission's report, when implemented in 1996-97, plunged most of the States in serious financial crisis.

The burden was so heavy that the then Finance Minister had no other option but to come out with a financial bailout package.

Even the Economic Survey 2005-06 had advised the Centre to remain vigilant and exercise caution in this regard. It noted that on the implementation of the Fifth Pay Commission's recommendations the general fiscal deficit rose each year to touch a peak of 9.9 per cent in 2001-02. The Government needs to "avoid a repetition of a similar deterioration [of fiscal situation] in the medium term," the Survey said.

However, the Prime Minister had commented that the Pay Commission issue would not hurt the fiscal situation.

The Finance Ministry had also assured that efforts would be made to see that the increased wage burden was reasonable, appropriate and affordable and in consonance with modern requirements.