The prime minister, Manmohan Singh, put his seal of approval on the formation of the seventh Central pay commission. This commission will review the salaries and compensations of Central government employees and pensioners. The recommendations of the commission will also affect the compensation packages of various state government employees. The timing of the announcement has inevitably raised questions about its motives. The government employees form a very large vote bank and the announcement will obviously please them. While it is true that the implementation of the recommendations of the seventh pay commission will take place only in January 2016, it is also a fact that the period of the current sixth pay commission runs till 2015. Thus there was no reason for a rush to announce the constitution of a new pay commission. In the rush lies the nub. The term of the fifth pay commission expired in 2005 but the then United Progressive Alliance government announced the sixth pay commission one year after that and its recommendations were received in 2008 and implemented with retrospective effect from January 2006. It is thus difficult to accept that the formation of the seventh pay commission in 2013 — two years before the term of the sixth is over — is completely unrelated to the general elections scheduled to be held in the first half of 2014.
It goes without saying that the implementation of the recommendations of pay commissions invariably adversely affects the state of the exchequer and measures to put in place policies of financial consolidation. The increase in expenditure apart, there is a more fundamental point regarding the appointment of successive pay commissions. The assumption underlying these commissions is that government employees deserve pay increases irrespective of their performance and their merit. Questions regarding the market value of a government employee is never raised. In the past, when the issue of pay revision has been linked to the total size of the staff, it has not been taken too seriously. Just as the present government, in spite of the presence of a liberalizing prime minister, has left many economic reforms incomplete, it has also neglected issues concerning the size of the State apparatus and the making of employment in government susceptible to market forces.