About Central Pay Commission
Unlike the private sector, the Government does not give yearly pay hikes to its employees. Instead, it gives out dearness allowance twice a year to compensate for the rise in prices. The periodic pay commission helps to adjust Government Salaries to market benchmarks. However the windfall gain that the government employees receive following pay commissions awards may not be forth coming when the next pay panel is appointed. The Government is examining a recommendation to implement pay commissions awards prospectively on the line of finance commission award as large arrears throw both centre and states finance disarray. Pay commissions are usually set up at 10 years intervals. The 6th CPC gave its recommendation in March-2008 recommending salary hike in the range of 20% to 40% in the salaries of the Government employees. It is under consideration of the finance ministry that the next pay commission report may be implemented prospectively in lieu of its retrospective implementation as implementation of pay commissions had adverse impact on both centre and states finances and many state government had expressed concerned on the issue of arrears. The 13th Finance Commission said in its report that “while many reforms can and should be contemplated to end this self-inflicted distortion, one action that could be taken immediately is that of making pay award commence from the date on which the recommendations of future pay commissions are accepted by the Government”. The Finance Commission had said if the centre implemented pay awards prospectively it would also give state governments time their awards in a way that the need for arrears does not arise. If finance commissions are able to present their-governmental recommendations without any need for retrospective fiscal transactions , then the same should be possible in the case of pay commissions as well, the commission has reasoned in its report.
To save itself from a larger fiscal trouble, the central Government disbursed the arrears in two installments,40% in 2008-09 and 60% in 2009-10.The arrear contributed significantly to the centre overshooting its target in 2008-09 ending the year with a fiscal deficit of 6% of GDP against 2.5% budgeted.
Therefore, if the consideration on the matter is made final, then there will be no pay commission arrears in future.
Source-The Economic Times
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