Ahead of the Sixth Pay Commission report, the Reserve Bank of India (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.
RBI's suggestion comes about a month and a half before the Sixth Pay Commission is scheduled to submit its report on a new pay structure for the central government employees and pensioners.
The states need to base their decisions relating to salary levels after due consideration to their fiscal capacity, employee strength, size of population and the required complementary expenditure for productive employment, the RBI said in its recent analysis of the state government finances.
Referring to the general tendency of states to by and large follow the central pay commissions, the report by the apex bank has pointed out that the state finances experienced deterioration in the latter part of 1990s subsequent to adopting the recommendations of the Fifth Pay Commission for their employees.
News : Economic Times