Public Service and Salaries

It speaks volumes about the priorities in our discourse on economic policy matters that the public comments on the Seventh Pay Commission (SPC) have centred on the fiscal i­mplications of the recommendations. What will be the additional “burden” on the Government of India? What impact will it have on the fiscal deficit? True, the pay commission’s terms of reference have to deal with the recommending levels of emoluments for the Government of India’s 3.3 million personnel as well as the large population of pensioners. However, the publication of this once-in-a-decade report was an opportunity for public debate on the role of the government in providing public services, the financial cost of doing so, the accountability of the government servant and the performance of personnel at d­ifferent levels and in different areas. That, unfortunately, has not happened.

For the record, with the central government accepting the recommendations of the SPC and deciding to implement them from January 2016, its total expenditure in 2016–17 will go up by Rs 68,400 crore as additional outlay on salaries and allowances and by Rs 33,700 crore on pensions, or by a total of Rs 1,02,100 crore, with an overall one-off increase of 23.55% over the business-as-usual projections. The SPC had its eye on the fiscal impact, for the additional expenditure will be equivalent to 0.65% of gross domestic product (GDP), compared to the higher increase of 0.77% of GDP as followed from the acceptance of the Sixth Pay Commission a decade ago. Implementation of the Sixth Pay Commission’s recommendations had led to a substantial rise in emoluments at many levels, and with their adoption by state governments, para-state organisations and even educational institutions, the overall financial impact was considerable. The financial impact this time will be less but the implications for the state governments are yet to be worked out. Since the focus for the past two decades has been on how to contain government expenditure, the outcome naturally has been on reducing the staff strength of the Government of India in the aggregate. According to the SPC, sanctioned staff strength reached a peak of 41.76 lakh in 1994 and declined to 38.90 lakh in 2014 (though the fall seems to have been largely on account of the corporatisation of BSNL). There is also an increasing ­unwillingness to fill up posts: 14% of the sanctioned posts had not been filled in 2006, 17% in 2010 and 18% in 2014. The central government is working towards further reducing staff strength and simultaneously increasing the use of contract labour.