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Q. 7th pay panel: In the backdrop of Central Government’s decision to implement the Seventh Pay Commission’s recommendations, comment on recent pay hike.
Jul 06, 2016 Related to : GS Paper- 3 and 2

Ans :

Introduction-

Recently central government has accepted the Seventh Pay Commission’s (SPC) recommendations and approved hike in the salary of Central government employees. The increase in salaries, excluding allowances, ranges between 14.3 - 23.5%. The entry-level salary for an employee is now fixed at a minimum of ₹18,000 per month, for a freshly recruited Class 1 officer at ₹56,100, and for the Cabinet secretary, the highest ranking official in the government, at ₹2.50 lakh per month.

Its impact-

  • About 12 million government employees and pensioners would benefit from the new pay-scales directly and several more indirectly.
  • The increase in pay will cost an additional ₹39,100 crore per year (excluding ₹29,300 crore of allowances), pensions will raise the burden by a further ₹33,700 crore per annum.
  • It will increase the purchasing power of a large section of the population which will facilitate better growth of the economy and the gross domestic product (GDP).

Is hike justifiable?

  • Hike was overdue since some time, and given the rapid rise in inflation over the last few years, the pay hike for government employees indeed required.
  • The latest increase has further narrowed the gap between private sector and government jobs, particularly at the junior and middle levels, which makes central government as competitive employer of talent.
  • More than one crore beneficiaries of the pay and pension revision will be better off, and the pay revision will drive a revival of consumption-led growth.
  • Similarly pay hike will motivate employees, which in turn increases efficiency and clamp down on corruption.

Suggestions-

  • Though government revised pay scales, but larger issues of administrative reforms were left unaddressed. Government should focus on bringing larger administrative reforms.
  • Like private sector efficiency should be rewarded and the employee does extraordinary work should be rewarded with high salary.
  • The SPC had recommended a system whereby a more productive person gets a better salary and perks, but this recommendation was not given due importance. Government should accept this recommendation, which will enhance the efficiency in functioning of government.

Conclusion-

Accepting the recommendations of SPC pay hike will bring additional burden on centre’s exchequer, but pay hike was need of the hour considering various aspects like inflation. But government has selectively accepted SPC recommendation, without giving due importance to other recommendations like administrative reforms. Similarly government should link pay hike to performance which will improve the efficiency.


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