Just as this paper has argued that cutbacks in income-tax rates were a wonderful opportunity for the finance minister to carry through otherwise unpalatable reforms, the 6th Pay Commission award is a good opportunity to bring in some dramatic improvement in the performance of government employees. The government had an opportunity to do it when the earlier 5th Pay Commission tagged some very well-meaning reforms to its pay scale revision. But the then United Front government lost the plot and instead only succeeded in pushing the Centre and even the states into financial crisis. The current award of the Commission seems unlikely to do so. The net impact of the 6th Pay Commission?s award is Rs 7,975 crore, far less than the Rs 23,000 crore in wages and pensions, the 5th Commission cost the government.
But it is the endorsement of reforms by which the present Commission?s work will be evaluated. The earlier Commissions till the fifth were indistinguishable from each other as they served to do little more than change the operative scales of the bureaucracy. The 6th Pay Commission had a clear mandate to suggest ways to improve service delivery in the government. By all accounts it has managed to do that. The Commission has instituted a performance related incentive scheme that will introduce a variable pay component in the salary structure of the government employees. It has also suggested contractual employment in government service and a lower qualifying standard to become eligible for pension, which is expected to encourage short-term appointments in the government. All these are wise steps, though the timeline for the performance-linked scheme says it will be introduced on a pilot basis in some ministries and the eventual rollout could take more than a few years. A more aggressive time line was necessary. The other welcome change is the endorsement of lateral entry in the government and a clear recognition that the pay of highly skilled regulators should be delinked from the common denominator approach. Of course, it is quite on the cards that such merit based differentiation would be objected to by the rank and file of government employees. In an election year that could be a tough call to take for this government.
