Another pay commission? The government should hold its horses

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Subscribe to enjoy similar stories. Recently, there have been news reports in India hinting at the possibility of a new Pay Commission. The basis of these stories is a memorandum submitted by the staff side of the National Council of the Joint Consultative Machinery to the new cabinet secretary and finance secretary, requesting the prompt establishment of the 8th Pay Commission, the rationale for this demand being that it has been 10 years since the last one.

There is also a built-in expectation that the Pay Commission will merge dearness compensation with basic pay, since the overall dearness compensation is now at 50% of basic pay, along with an additional increment on account of fitment. This merger will allow the revision of all other allowances as well. From the point of view of employees seeking higher wages for themselves, such a demand is not surprising.

However, it is worth asking if meeting this demand is necessary, or even desirable. There are many aspects to this, the most important being whether there is a need for revising pay at all, given that government employees already receive full compensation for cost-of-living increases, as measured by the Consumer Price Index for Industrial Workers (CPI-IW), apart from regular annual increments and periodic promotions that assure them career progression. It may, in fact, be argued that the system of dearness compensation over-compensates government employees, because it is calculated on the basis of the CPI-IW.