Friday, June 13, 2008

Pay panel : Only marginal changes expected

Under pressure on account of mounting expenditure, the government is likely to make only marginal changes in the recommendations made by the Sixth Pay Commission. Changes are likely only in the case of defence personnel and police forces, it is understood.

The committee of secretaries headed by Cabinet secretary K M Chandrashekhar looking into the commission’s recommendations is expected to submit its report by the end of July. These would then go to the Cabinet for approval.

Another panel headed by finance secretary D Subbarao is separately looking into the grievances of defence and police forces. This committee will give its inputs to the committee of secretaries that has secretaries of the departments of home, defence, revenue, expenditure, post, security as well as deputy comptroller and auditor general and member secretary of Railway board as its members.

The defence ministry and police forces have already made presentations before the committee. While marginal changes are expected to be carried out when the award is implemented, the government is unlikely to go in for major correction as it does not have much fiscal space. There is also a view that the government is only an implementing agency for the commission’s recommendations. The government’s ability to reward its employees is limited by the rising pressure on its coffers on account of subsidies for food, oil and fertiliser, as also the farm loan waiver package.

The total direct subsidies on account of food, fertiliser and oil this fiscal is estimated at Rs 66,357 crore. When some interest expenses are included, this would rise to Rs 71,430 crore. The farm loan waiver scheme is expected to drain Rs 25,000 crore. The cost of implementing the pay commission’s report this fiscal is pegged at Rs 30,062 crore.

The panel’s recommendations had invited responses showing disappointment from various segments of the government. Some officials told ET that the wage increase recommended was far below expectations and could lead to an exodus to the private sector.

One civil servant who joined the revenue service after graduating from an IIT admitted to ET that some officials were taking private tuition to make both ends meet at a time when inflation was above 8%. Middle-level officers, particularly those who are given official accommodation and transport, claim that the recommendations in their present form will not benefit them much.

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