Keep government pay hikes within the limits of fiscal prudence

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Subscribe to enjoy similar stories. The government’s decision to set up the 8th Pay Commission for salary revision is hard to reconcile with its oft-vocalized stance in favour of fiscal prudence. Agreed, the period of the 7th Pay Commission, which came into effect in 2016, will end in 2026.

So there was a case for setting up a new one. Also, acting a year in advance will give the Centre sufficient time to consider its recommendations. But the timing of the announcement, just three weeks before Assembly polls in Delhi, where India’s ruling Bharatiya Janata Party is trying to dislodge the Aam Aadmi Party from power, suggests an attempt to win brownie points with the electorate.

Delhi houses many central employees and even the state government’s staff can expect pay hikes in tandem with theirs. What is far from clear is whether these salaries should be raised at all and if the public exchequer can afford to bear the burden of this largesse. Take these one by one.

Is there really a case for another Pay Commission? No, according to economist and former chief statistician of India, T.C.A. Anant. In an op-ed for Mint, he recently pointed out that the typical entry-level wage in government is much higher than at a comparable level in the private sector.