The Manmohan Singh government’s announcement of a four-member Seventh Pay Commission for government employees headed by former Supreme Court judge Justice Ashok Kumar Mathur is clearly a sop for this huge vote bank on the eve of the next general elections. Considering that the sixth Pay Commission had been appointed in October 2006 the government could well have left it to the next government to appoint a new pay panel. The Eleventh Finance Commission had categorically said that pay commissions need not be set up routinely as their awards had a cascading effect on the finances of state governments. Evidently, however, the UPA wanted to earn some brownie points and thought it expedient not to leave it to the next government to set it up and walk away with the honours. It did not think a pay panel is a major drain on the exchequer. The commission is slated to submit its report in 19 months and recommendations will be effective from January 2016.
A key challenge before the commission would be to ensure that government salaries reflect productivity and performance within fiscal constraints. Implementation of the Sixth Pay Commission had increased salaries by 21 per cent resulting in an additional annual outgo of nearly `18,000 crore for the Union government, besides a payout of arrears of `30,000 crore. This had aggravated inflationary pressure on the economy. The seventh commission now has the unenviable task of addressing both the fiscal concern and the rising cost of living.
Besides the timing of the announcement of the Seventh Pay Commission being suspect it is of the same pattern as other liberal concessions to various sections of society on political grounds. The government should also introduce a hire and fire policy and pay its employees the best compensation like the private sector does. Having done that, it must sharpen the accountability in the government sector in contrast to the current pattern where there is too much security and lack of deterrent against indolence, sloth and lack of work ethics.