Friday, February 29, 2008

Sixth pay commission expected to give a 25% pay hike

The Sixth Pay Commission was constituted in October 2006 to rec-ommend comprehensive changes in salary structure of the govern-ment employees. It would give recommendations concerning the pay structure of government employees comprising industrial and non- industrial central government employees, all-India services, armed forces personnel and employees in the Union Territories. Besides, the commission would examine the pay structure for Indian audit and ac-counts department, regulatory bodies set up by Acts in Parliament and Supreme Court employees.

And if the provision for railway employees is an indication (Rs 5,000 crore for 14 lakh em-ployees), government employees may be in for a 20%-25% hike. In the current fiscal, the outgo on account of pay and allowances for the government is being estimated at Rs 46,379 crore. However, if one factors in the arrears and pensions with retrospective effect from January 1, 2006, the actual impact could be as high as three times this figure, experts say.

Usually, a central government employee’s total remuneration includes a basic salary, a 51% dearness pay merged with basic and a 41% dearness allowance of the total.

While 90% of the railways are constituted by grades III and IV em-ployees, a similar proportion is true for the remaining set of central government employees. For the civilian departments, the percentage of employees in the higher grades are more, however, this is offset by the fact that in defence, majority of the employees are in the Group D category.

Experts feel that the figures look too low than what was anticipated. But a few feel that the final figure may be moderated because unlike the Fifth Pay Commission, salaries since then have been 100% neu-tralised to the Consumer Price Index (CPI). Therefore, the increases may not be that drastic. Prior to that, for the extent of neutralisation to the CPI was about 75% for the lower grades.

The New Pension Scheme (NPS) is out of the terms of reference for the Sixth Pay Commission, lest political opposition influence defined benefit as against the defined contribution system prescribed in the NPS.
The 40 lakh government employees include those in the armed forces, not taking into account the various grades. Currently, civilian posts in the central government are classified into four groups (A, B, C and D) with reference to their scales of pay.


Anonymous said...

Interesting. I've seen estimates of an annual impact of Rs 20,000 crores on the Central budget from the Sixth Pay Commission recommendations, slightly higher than the Rs, 15,000 crore you suggest (three times the Rs, 5,000 figure just for the Railways). Let us take the higher figure of Rs, 20,000 crores in US dollar terms: it is about $5 billion. But to put this in perspective, the Adani brothers made nearly $8 billion dollars on the BSE on November 27, 2007. If this is the scale of private sector wealth increases for two individuals, then even a figure of Rs. 20,000 crores for the fiscal hit taken by the Government for about 6 million employees and retirees - is paltry, and easily affordable.

s s negi said...

sixth pay commission 2008