A substantial hike in compensation packages for all categories of public servants has been recommended by the Eighth Pay and Services Commission. The government employees would certainly be happy if the proposed pay-hike, as has already been indicated by the finance minister, is implemented from the first day of the next fiscal year (FY), 2014-15. However, a lot of issues, financial or otherwise, are involved in the pay-hike of public servants across the board.
The first and foremost issue here is the rate of increase -- nearly 100 per cent -- in basic pay which is again linked to the rates of some allowances and retirement benefits of all categories of public servants. In the budget for the current fiscal, the total spending on account of pay, allowances and pensions and gratuities of 'pure' government servants has been estimated at nearly 27 per cent of the total revenue expenditure. Given the prospects of hike in revenue earning of the government in the coming years, the percentage, in all probability, would go up if it (the government) decides to implement the recommendations of the Pay Commission without any major change. In that case, resource allocations to other sectors might pose many difficult challenges to the government.
Then again the proposed hike in the compensation packages carries all the potential of fuelling inflation. The finance minister, however, has dismissed such a possibility. The current price trends, both at home and in international markets, have, possibly, encouraged him to make such an assessment. But going by the past experiences, one has reasons to fear about spiralling of prices following the implementation of the pay-rise. Moreover, it is not just the issue of public servants. The private sector will, invariably, come under pressure from their employees and workers to increase salaries and wages. In that event, the effect of pay-hikes in both public and private sectors on the price situation would be far greater.
Moreover, the Eighth Pay Commission, like the previous ones, has also tried to justify the hike in the compensation packages for public servants, saying that it would infuse 'dynamism' into the public administration and raise the efficiency level of the government servants. But that did not happen earlier on the ground. The latest pay-hike proposals, if and when implemented, are also unlikely to make any difference in the quality of service delivered by the public servants to the taxpayers.
Besides, the government does need to carefully weigh the pros and cons of taking such a huge load of revenue expenditure in one-go on the public finances. Establishment of a permanent pay commission to recommend or suggest pay-hike on an annual basis, taking the official rate of inflation into consideration, would have been a better option for the government. Also one can not put the issue of the size of Government, in terms of number of its employees and agencies under its control, on the backburner. 'Value for Money' should rather be considered a critical element for linking inputs and outputs as far as the functioning of Government is concerned, in order to ensure proper delivery of public goods and services. This issue has been highlighted, time and again. But successive regimes, political or otherwise, overlooked and sidetracked the need for right-sizing Government. This is an urgent issue of consequence for the people at large. If it is not rightly addressed on a priority basis, the hike in compensation packages for public employees will only mean overbloated public expenditures. Quality and efficiency of public services will then continue to delude the country's teeming millions.
Pay-hike proposals for public servants
FE Team | Published: December 23, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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