As the 8th Pay Commission looms, a look at what really drives the govt’s wage bill

₹10,000 becomes ₹20,000. As per media reports, the 8th CPC may recommend the fitment factor of 1.92-2.86, largely in line with 1.86 recommended by the 6th CPC and 2.57 by the 7th CPC.While the pay increases add to the government's employee costs, recent trends show they have become less cumbersome.The central government spent ₹2.75 trillion on the pay and allowances of its regular civilian employees in FY23, accounting for 6.6% of the total budgetary expenditure.

This marks a notable decline from 11.4% in thefinancial year 2000.This has been mainly due to a sharp decline in the total number of regular civilian employees since the late 90s, while Centre’s budget continuously grew.Over the last 25 years, the number of central government employees has gone down considerably from about 3.9 million in 2000 to 3.1 million in 2023. A sharp dip took place at the turn of the century when there was a transfer of staff from the central government to BSNL, a public sector company, between 2000 and 2001.

Even after that, the downsizing continued over the next two decades.While there has been a strong case for making governments more efficient by cutting redundant work and posts, and thereby cutting fiscal costs, it is notable that the number of sanctioned posts has remained high. The number of sanctioned posts, which saw a mild decline initially, has risen since 2005 and reached 4.0 million in 2023.The trend of contracting employee headcount and an expansion in the sanctioned posts has led to vacancy rate rising from 8.6% in 2000 to 24.2% in 2023, creating a paradox.