Since India's Independence,
seven pay commissions have been set up on a regular basis to review and make
recommendations on the work and pay structure of all civil and military
divisions of the Government of India
First Pay Commission
The
first pay commission was constituted in May 1946, and had submitted its report
in a year. and the importance is on the report. chairman was Srinivasa
Varadachariar. The first pay commission was based upon the idea of “living
wages” to the employees, this idea was taken from the Islington Commission and
the commission observed that “the test formulated by the Islington Commission is only to be liberally interpreted to suit
the conditions of the present day and to be qualified by the condition that in
no case should be a man’s pay be less than a living wage." The commission emphasized on the idea of the living wages and stated that the government which
is going to introduce the minimum wages legislation for the workers of the
private industry should also follow the same principle for its own employees.
The commission basically recommended that the lowest rung employee should at
least get minimum wages.
Second Pay Commission
The
second pay commission was set up in August 1957, 10 years after independence and it gave its report after two years. The
recommendations of the second pay commission had a financial impact of Rs 396
million. The chairman of the second pay commission was Jaganath Das. The second
pay commission reiterated the principle on which the salaries have to be
determined. It stated that the pay structure and the working conditions of the
government employee should be crafted in a way so as to ensure efficient
functioning of the system by recruiting persons with a minimum qualification.
Third Pay Commission
The
third pay commission set up in April 1970 gave its report in March 1973 i.e. it
took almost 3 years to submit the report, and created proposals that cost the
government Rs. 1.44 billion. The chairman was Raghubir Dayal. The third pay
commission added three very important concepts of inclusiveness,
comprehensibility, and adequacy for pay structure to be sound in nature.The
third pay commission went beyond the idea of minimum subsistence that was
adopted by the first pay commission.the commission report say that the true
test which the government should adopt is to know weather the services are
attractive and it retains the people it needs and if these persons are
satisfied by that they are getting paid.
Fourth Pay Commission
Constituted
in June 1983, its report was given in three phases within four years and the
financial burden to the government was Rs.12.82 billion.This commission has been set up on dated
18.3.1987, Gazette of India (Extra ordinary) Notification No 91 dated
18.3.1987, The chairman of fourth pay commission was P N Singhal.
Fifth Pay Commission
The
Fifth Pay Commission was set up in 1994 at a cost of Rs. 17,000 crore. The
chairman of fifth pay commission was Justice S. Ratnavel Pandian.
Financial Impact of Fifth pay commission
With the
implementation of the Fifth Pay commission a huge burden was taken up by the
central government. It declared hike in salary of about 3.3 million central
government employees. Further, it also insisted on pay revision at the state
government level. The Fifth pay commission disturbed the financial situation of
both the Central and the State Governments and led to a hue and cry after its
implementation. The Central government's wage bill before the implementation of
the commission’s recommendations was 218.85 billion in 1996-1997 which also
included pension dues, and by 1999 it shot up by about 99% and the burden on
the exchequer was about to Rs 435.68 billion in 1999-2000.With regard’s to the
state government the bill went up by 74%. The state governments which paid
about Rs 515.48 billion in 1997 as salaries, had to pay Rs 898.13 billion in
1999 as salaries. This clearly indicates the burden on the state and the
central government. Many economists say that about 90% of the revenue of the
state went in as salaries. 13 states of India were not in a position
to pay salaries to its employees due to the hike and hence the central
government’s help was sought.
Other recommendations of the Fifth pay commission
One of
its recommendations was to slash government work force by about 30%. It also
recommended to reduce the number of pay scale from 51 to 34 and to not recruit
to about 3,50,000 vacant position in the government. None of these
recommendations were implemented.
Criticisms of World Bank on fifth pay commission
The
World Bank criticized the Fifth Pay commission, stating that the Fifth Pay
Commission as the 'single largest adverse shock' to the public finance of the
nation. It also said that the number of employees of the government was 'not
unduly' large, but there was a 'pronounced imbalance' in the skills. It noted
that about 93% of the employees were of 3rd or 4th grade.
Sixth Pay Commission
In July
2006, the Cabinet approved setting up of the sixth pay commission. This
commission has been set up under Justice B.N.Sriktirshna with a time frame of 18 months. The cost of hikes in salaries is anticipated to be
about Rs. 20,000 crore for a total of 5.5 million government employees as per
media speculation on the 6th Pay Commission, the report of which is expected to
be handed over in late March/early April 2008. The employees had threatened to
go on a nationwide strike if the government failed to hike their salaries.
Reasons for the demand of hikes include rising inflation and rising pay in the private sector due to
the forces of Globalization. The Class 1 officers in India are grossly
underpaid with an IAS officer with 25 years of work experience
earning just Rs.55,000 as his take home pay. Pay arrears are due from January
2006 till September 2008. Almost all the Government employees received 40% of
the pay arrears in 2008 and balance 60% arrears (as promised by Government) has
also been credited in Government employees account in 2009. The Sixth Pay
Commission mainly focused on removing ambiguity in respect of various pay
scales and mainly focused on reducing number of pay scales and bring the idea
of pay bands. It recommended for removal of Group-D cadre.
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