Centre’s pay hike not in sync with reality

The thinking behind the recommendation of the Seventh Central Pay Commission, unveiled on Thursday, does not appear to be in sync with the times we live in. It would have been more appropriate if Central government employees and pensioners had obtained increases of pay and perks of a lesser order — say around 50 per cent of what’s been proposed. Our agriculture is in crisis, and manufacturing and exports are returning  below-par figures. Investment in the system has not picked up, and that’s bad for the future. The government assertion of being on track for a 7.5 per cent rate of growth rests on modified data calculation methods whose merit is contested, including by responsible establishment figures such as the RBI governor. In the circumstances, a hefty rise of nearly 300 per cent of basic salary appears to mock those who on a daily basis fail in their struggle to keep home fires burning.

The government is not a sector which is deemed to be productive. Indeed, if it has a middle name, it can only be “inefficiency”. This has not changed under Prime Minister Narendra Modi. Therefore, it is all the more surprising that pay rises should be catapulted three times. In contrast, in the private sector, say in the past decade, salaries have pretty much stayed at old levels in the main, and there are companies across sectors where employees have had to make a choice between keeping their jobs and taking cuts. This has been in the backdrop of a world economy that’s yet to recover from the shock of 2007-2008 which impacted India negatively and slowed us down. So, it is not quite clear what the government sector wishes to celebrate. And it has to be borne in mind that a significant upping of state government salaries will follow in the wake of the pay hikes in the Central government.

It is also useful to remember that government salaries have to be linked not just to the capacity to pay, but to the country’s economic circumstances and ethos. It seems that the expenditure needed to meet the recommendations of the pay panel will be about 0.66 per cent of GDP, which is a shade lower than was the case with the Sixth Central Pay Commission. But then the economy was buoyant. This is not so today. It is also ironical the government did not budge enough on the issue of one rank-one pension (OROP) for the armed forces, but has had no compunction extending this principle to civilians and the paramilitary. This is politics as the potential voting numbers are much greater on the latter side. Pay panels for MPs and the government sector should be composed of independent experts, not would-be beneficiaries.

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