Wednesday, February 27, 2008

Sixth Pay commission : Some Calculations

The recommendations of the Sixth Pay commission are expected to cost the exchequer a minimum of Rs 18,000 crore, if the Rs 5,000 crore provisions in the Railway budget towards this end are any indication. The Sixth Pay Commission is expected to submit its report by April 4, 2008.

The government’s total employee strength is around 5.4 million and the Railways employ 1.5 million. The Defence forces employ over 2 million personnel. This would mean that the additional burden for non-defence personnel would be about Rs 6,600 crore. This apart, the additional cost of implementing the recommendations for about 2 million Central government employees would be another Rs 6,600 crore. Though comparable, this is slightly lower that the Fifth Pay Commission’s recommendation of around Rs 21,000 crore. The Fifth Pay Commission submitted its report in 1996.

Railway minister Lalu Prasad had made a provision of Rs 1,250 crore for the interim Pay Commission report last year. The commission did not, however, give any such award. In a written reply in the Rajya Sabha today, minister of state for finance K Bansal said, “The Pay Commission headed by Justice B N Srikrishna is to finalise and submit its Report within 18 months of its constitution, that is by April 4, 2008.”

The RBI has sounded a word of caution by suggesting that the state governments should not adopt the pay panel recommendations unmindful of their capacity to bear the additional burden. The states need to base their decisions relating to salary levels after due consideration to their fiscal capacity, employee strength, population size and required complementary expenditure for productive employment, the RBI said in its recent analysis of the state government finances.
Source : Indian Express