New Delhi, Sept. 25: The Centre today announced the Seventh Pay Commission, seeking to spread cheer among the army of government employees just when the UPA is under attack for bending over backwards to protect convicted lawmakers.
Although the formation of a pay commission is expected to be announced in the third year of every decade, the Congress lapped up the announcement in the run-up to the Assembly polls in five states and presented it as a gift to government employees.
The direct beneficiaries of the pay commission recommendations are 80 lakh central government employees and pensioners. But state government employees also stand to gain as states usually adopt the proposals after some modifications.
The new recommendations will be implemented only in 2016 but the Congress chose to fiercely debate the issue today as it is under pressure after the decision to bring an ordinance to circumvent the Supreme Court order for disqualifying MPs as soon as they are convicted.
The BJP had swiftly altered its position to attack the government, though the Opposition party had supported the idea of amending the law at an all-party meeting earlier. The BJP and the Aam Aadmi Party have sought time with the President tomorrow to complain against the ordinance.
The Centre had to cough up around Rs 40,000 crore to implement the recommendations of the Sixth Pay Commission.
Realising that the fresh announcement could be criticised at a time the Centre has announced “austerity” measures, Congress communications department chief Ajay Maken said pay commissions helped the government attract and retain the best available talent.
Congress spokesperson Raj Babbar thanked Sonia Gandhi and Prime Minister Manmohan Singh for the “good news”. Maken went a step ahead, recalling how the NDA government had failed to announce the formation of the Sixth Pay Commission in 2003.
The Atal Bihari Vajpayee government had deferred the formation as the country was scheduled to go to the polls in 2004. The sixth panel was formed in 2005 by the Manmohan Singh government after coming to power in 2004.
The government implemented the Sixth Pay Commission report from 2006, aligning with the previous decade-wise implementation in 1986 and 1996.
“As the commission takes about two years to prepare its recommendations, the award of the seventh pay panel is likely to be implemented from January 1, 2016,” finance minister P. Chidambaram said.
The names of the chairperson and members and the terms of reference will be finalised shortly, he added.
The finance ministry statement, however, did not make it clear whether the panel will also look into the pay structure of the armed forces as earlier or there will be a separate commission as demanded by them.
“We welcome the government’s move to set up the pay commission but we have a reservation. It should be implemented with effect from January 1, 2011, as in the case of central PSUs whose employee pay scales are revised every five years,” said K.K.N. Kutty, the president of Confederation of Central Government Employees and Workers.
Industry chambers said the pay panel announcement would put pressure on the state governments and the private sector to increase salaries.
“The private sector too will be compelled to hike salaries, leading to overall wage cost to the economy, which is grappling with a slowdown. The move is out of turn at this point of time,” said D.S. Rawat, Assocham secretary-general. “At that point of time (2016), the exchequer will be bearing the full load of the Food Security Act and other welfare schemes.”
But Suman Jyoti Khaitan, the president of the PHD Chamber of Commerce and Industry, said the implementation of the pay commission recommendations would enhance the income levels and consumption.
The implementation of the Sixth Pay Commission was an indirect stimulus to the economy, Khaitan added.