Home Cover Story 7TH PAY COMMISSION How full are the coffers?
Cover Story

7TH PAY COMMISSION How full are the coffers?

Over 40 years ago, a meeting of the central government employees was organised at the Boat Club in New Delhi. It was the time when the 3rd Pay Commission report was to be announced and Indira Gandhi was the Prime Minister. People were enthusiastic and had gathered to hear an address by Atal Bihari Vajpayee. In his inimitable style, Vajpayee narrated an interesting story. It went thus: “On pay day, a man took his salary and headed home. As he neared his house, he met the panwallah and the chaiwallah. The man paid them their dues for the previous month. Next was his barber, who too took his dues. So did the washerman and finally the grocer, who was paid a substantial sum due to him. When the man reached his home, his wife asked him: ‘It is your pay day, what have you brought for me?’” Here, Vajpayee paused in his characteristic way and then spread out his arms wide and completed his story, “dher saara pyaar (a lot of love).” Today, years after Vajpayee’s anecdote, the nation is waiting for the report of the 7th Pay Commission and nothing seems to have changed. Narendra Kaushik wonders what the central government employees will get this time, “dher saara pyaar” or something more!

BETWEEN 2003-04 and 2007-08, it was boom time for the Indian economy. Propelled by stupendous growth in manufacturing, transport, communication and construction, the GDP (gross domestic product) clocked on an average close to 9 per cent growth every year. Between 2005-06 and 2007-08, it grew by 9.5 per cent, 9.7 per cent and 9 per cent, respectively, for three years.

Therefore, when the 6th Central Pay Commission (CPC), headed by Justice BN Srikrishna, proposed a hike in salaries of over 45 lakh government servants through 20 grades clubbed under four pay bands on March 24, 2008, not only did the Manmohan Singh government accept the recommendations instantly, it also doubled the award.

As a consequence, the pay and allowances of central government employees, according to the 14th Finance Commission estimates, more than doubled between 2007-08 (`74,647 crore) and 2011-12 (`1,66,792 crore).

Great expectations
No wonder the expectations from the 7th Central Pay Commission, chaired by Justice Ashok Kumar Mathur, have hit a high with government employees at the Centre hoping for a substantial increase in salaries and pensions. The government employees talk of recovery in the Indian economy (Economic Survey 2014-15 says the GDP is likely to grow between 8.1 and 8.5 per cent in 2015-16). Over a dozen websites run calculators which claim to work out estimated pay, allowances and pensions of a government employee on the basis of the 6th CPC recommendations and other fitment formulae.

There is anticipation that the 20 states, barring Himachal Pradesh, Karnataka, Assam, Andhra Pradesh, Punjab, Kerala, West Bengal and Meghalaya, which implemented the report of the 6th CPC, will also accept the recommendations of the 7th Pay Commission.

Union Finance Minister Arun Jaitley has estimated that the salary and pension expenditure is expected to rise by 15.8 per cent and 16 per cent, respectively, in 2016-17

There is hope that when the central government and the states implement the increase from April next year, a large number of government employees will be in a position to afford cars. It is also hoped that the increase might lead to a boom in the real estate market in Tier 3 and Tier 4 towns where over 50 per cent of middle-class families sustain themselves on government jobs.

Drain on resources
Officials in the Commission, however, want the central government staff to temper expectations. They refer to a less-than-adequate-monsoon, high prices of essential food commodities, including onions, non-introduction of big bang reforms like Goods & Services Tax (GST) and stress on fiscal deficit. The officials told gfiles on condition of anonymity: “2015 is not 2006. There will be some changes but don’t expect a huge increase.”

The Commission’s office, comprising around two dozen officers (including Chairman, two members, a Secretary, two Joint Secretaries, three Directors, an Under Secretary and an Adviser), operates from a private building in Qutab Institutional Area, South Delhi.

Union Finance Minister Arun Jaitley apprehends implementation of the award may increase his salary and pension budget by around 16 per cent and dry up his resources for building capital assets. In a medium-term expenditure framework statement, laid before Parliament on August 12, the minister estimated that the salary and pension expenditure is expected to rise by 15.8 per cent and 16 per cent, respectively, in 2016-17. This will be 5 per cent more than the budgeted growth of 3.1 per cent in 2015-16.

The expenditure increase may make it difficult for the Centre to achieve a fiscal deficit target of 3.9 per cent of the GDP for 2015-16. Moreover, there are fears that the salary hike might lead to inflation.

Retirement before 60

CIVIL servants fear that the Commission might tweak retirement terms and introduce a ‘33 years of service or 60 years of age, whichever is earlier’ clause. But the Commission officials are clear that this is not in the Commission’s terms of reference. The officials, however, do not rule out a decision on this by the government.

The decision could divest over a lakh employees, who joined in 1982 and afterwards, of service up to five years. For instance, SR Mohanty, a 1982-batch IAS officer born on March 21, 1960, who is currently serving as Principal Secretary, Renewable Energy and Education Department in Madhya Pradesh, will have to demit office next year if the new retirement terms come into effect then. There are also four dozen Indian Police Service (IPS) officers of the 1982 batch who may have to hang up their boots.

Bureaucrats look at the Centre’s move to tweak the retirement terms as an attempt to create new vacancies in the civil services. There is also speculation that the move would allow the government to get rid of officers who are influenced by Congress and Left ideologies. “It is a political move. It will work as a disincentive for old recruitments. The government will have a field day,” a Joint Secretary-level officer in Krishi Bhawan told gfiles.

Parity with IAS
There is also a sub-plot which has unfolded with various civil services once again demanding parity with the IAS from the 7th CPC. Associations of IPS, Indian Revenue Service (IRS), Indian Railway Technical Service (IRTS) and Indian Forest Service (IFS) officers have sought pay parity with the IAS, who draw more salaries on account of two additional increments granted to them by the government at three levels.

Civil servants fear that the Commission might tweak retirement terms and introduce a ‘33 years of service or 60 years of age, whichever is earlier’ clause. But the Commission officials are clear that it is not in the Commission’s terms of reference

The 6th CPC had rejected the demand on the grounds that “the role of IAS is still very important in the overall scheme of governance. They have an important coordinating, multi-functional and integrating role in the administrative framework, with wide experience of working across various levels in diverse areas in Government. They hold important field level posts at the district level and at the cutting edge at the start of their careers with critical decision making and crisis management responsibilities. The leadership function, the strategic, coordinating and integrative role at this level requires the best talent available.” The Commission thus concluded that there was a need to maintain the existing position.


In a 135-page memorandum submitted to the 7th CPC, the IPS (Central) Association has made a strong case for equal pay for all civil services and discontinuation of the British legacy which attached a premium to the IAS. Ironically, the memorandum cites the improvements brought about in the British police system to buttress its case. It argues that since the IAS and the IPS are deemed to be All-India Services and created under Article 312 of the Constitution, it was imperative to treat them uniformly. The document quotes the Administrative Reforms Commission (1967) and National Police Commission (1967), headed by former Cabinet Secretary Dharma Vira, which recommended equality in payscales and parity in prospects of the IPS with the IAS. It cites the examples of Punjab terrorism, the Satyam scam and the Indian Mujahideen conspiracy case to drive home the point that the Indian Police Service is an essential public service and contributes to development.

THE association has demanded change in nomenclature for the constable (civil police officer, Grade II) and head constable (civil police officer, Grade I), overtime for extra hours, insurance for police personnel and implementation of one rank, one pension in the IPS on the lines of the defence forces.

Government employees at the Centre are hoping for a substantial increase in salaries and pensions

The document claims ‘uniformity of ranks across the civil services is in the interest of harmonious working relations in the State’.

“Can anyone say the rule of law, public order and crime control is inferior to anything. Is it not a must for development?” asks P Venkat Rama Sastry, an Inspector General (IG) with the National Investigation Agency (NIA) and Secretary of the IPS (Central) Association. Sastry refuses to attribute the IPS association’s demand to a turf war. “The turf is all of the public. Public interest should decide who will man what,” he claims. He says the elevation of the IAS is incumbent on suppression of others. Besides pay parity, the IPS association has also demanded more Joint Secretary posts for the police cadre.

The Indian Forest Service (IFS), which holds only one Secretary-level post at the Centre, too wants parity with the IAS. In a representation submitted to the CPC in June last year, the IFS association hoped that the Commission will remove any kind of ‘inter-service’ and ‘intra-service’ disparity and ensure a commensurate payscale to preserve the dignity and motivation of the IFS. The association has also demanded posting of IFS officers as advisers in India’s foreign missions. It points out that the world was turning from ‘grey growth’ to ‘green growth’ and there was added emphasis on preservation of ecosystems.

The IFS association quotes from the debate in the Constituent Assembly to stress how the Constitution framers provided through creation of All-India Services — ‘without depriving the States of their right to form their own civil services, there shall be All-India Services recruited on an all India basis with common qualifications, with uniform scale of pay and members of which alone could be appointed to those strategic posts throughout the Union’.

Like the 6th CPC, the 7th CPC is also expected to reject the demand of the IRS, IPS, IAAS and IRTS for parity with the IAS. “Let them get into merit if they want parity,” a member of the Commission told gfiles when asked about the demand.

IAS perks
The reiteration seems to be in line with what the IAS Association has been arguing with the Commission. In two meetings with the Commission (one last year and another this year), the IAS Association has not only sought continuation of its premium position, but also demanded perks equivalent to defence and police officers.

Associations of the IPS, Indian Revenue Service, Indian Railway Technical Service and Indian Forest Service officers have sought pay parity with the IAS, who draw more salaries on account of two additional increments granted to them by the government at three levels

“There is no support system for us. An officer of our rank in the army gets 13 officials in his personal staff. In the Air Force, he gets 6. In the Navy and the IPS, he gets 4. We get none and have to stand in the queue for milk apart from handling emergencies,” a Joint Secretary in the government fumed.

Sanjay Bhoosreddy, Joint Secretary, Animal Husbandry Department, and secretary, IAS Association, rejects the other civil services’ demand for parity. “It is a shallow and pernicious argument. There is something called merit,” Bhoosreddy points out.

The extension mystery

With the 18 months’ time given to the 7th Pay Commission to submit its report coming to an end in August, the government has given it an extension of another four months. The government says the extension was given because the Commission had asked for it. Many are not ready to believe that the 7th CPC, which was almost ready to submit its report, had suddenly requested an extension. They wonder what the necessity was for this extra time.

Two months ago, on July 24, 2015, the 7th CPC had, on its official website, voluntarily said that work was on and it would be completed well within schedule. Even until the second week of August, there were no indications from the members of the Commission that they would require an extension. In these circumstances, the fact that the 7th CPC has suddenly requested for additional time has caught many by surprise.

Even on August 7, 2015, NC Staff Side Secretary Shiva Gopal Mishra said after meeting with the 7th CPC that a delay of one month may occur in submitting the report to the government. Moreover, consecutive news items in the media, including a PTI report, had said that the Chairman of the 7th CPC, Justice Ashok Mathur, had assured the report would be submitted by the end of September.

DA+basic pay= raise
S¬¬INCE the terms of references of the 7th CPC ask it to review, rationalise and simplify the variety of existing allowances being paid to employees to ensure that the pay structure takes them into account, there is a strong possibility that the Commission may recommend merger of 50 per cent of DA (dearness allowance) with basic pay. In March last year, the central government raised DA to 100 per cent from 90 per cent. The merger could increase salaries by about 30 per cent.

The Commission is supposed to suggest ‘desirable and feasible’ changes in pay, allowances and retirement benefits for central government employees (industrial and non-industrial), personnel belonging to All-India Services, personnel of the Union Territories and Indian Audit and Accounts Department, members of regulatory bodies (barring the Reserve Bank of India) set up under Acts of Parliament, officers and employees of the Supreme Court and personnel of defence forces, keeping in mind the economic condition of the country and need for fiscal prudence. It is expected to link the payment of bonus with performance and productivity.

According to the last census carried out six years back, there are 34 lakh central government employees. There are also over 40,000 temporary employees hired on contract by different ministries, departments and public sector units at the Centre.

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