CKG Nair, The writer is a public policy commentator
The government of India set up the Eighth Central Pay Commission (CPC) on October 28, ending a rather long wait. Central government employees and pensioners, numbering about 11 million, can now take a deep breath and smile.
Being a beneficiary of four CPCs while in service, I am privy to the collective happiness of serving employees. Their festivities would build up starting from the appointment of the commission. Various service and pensioner associations and their federations would elaborately prepare and submit memoranda, fervently demanding several benefits.
They would also seek in-person meetings with the full commission, and its chair/members individually, to drive home how and why each group’s demands are the most genuine and must be recommended to serve the nation better and for its larger benefit. There would be longer lunch breaks and various groups would assemble on the premises of the many bhavans, discussing only pay commission related matters. Another round of the employees’ and pensioners’ decennial festival has begun and would continue till the recommendations are implemented once they are accepted by the government in due course.
As the recommendations of the CPC directly impact state government employees and pensioners, another about 15 million are also happy that a new panel has been set up. Thus, the direct beneficiaries are about 26 million, which is 26 million families or about 125 million people. Employees of public sector undertakings, universities, etc. are indirect beneficiaries, since their pay revision mechanisms closely follow the CPC recommendations.
The pay revisions of governments and the public sector will spill over to the private sector, both organised and unorganised, and to general wage levels in due course. Therefore, the CPC is effectively a national pay commission impacting salary/wage revisions all around—directly or indirectly, fully or partially—immediately on implementation of its recommendations or with a time lag. It will be a big boost to consumption. Coming after two major consumption boosting policy measures of the central government—rejigs of income tax and goods and services tax—this will certainly keep the multiplier-accelerator pedals of the economy pressed for some years to come.
The eighth CPC is a three-member body with a chairperson, part-time member, and member-secretary. It will complete its recommendations within 18 months; it may also give interim reports to the government. Though the remit of the panel is wide, it is bound by a few major economic/financial constraints, as stated in its press release. They are: economic conditions in the country and the need for fiscal prudence; need to ensure adequate resources for developmental expenditure and welfare measures; unfunded cost of non-contributory pension schemes; likely impact on the finances of the state governments; and prevailing emolument structure, benefits, and working conditions available to employees of central public sector and private sector.
The three-member composition is a return to the fifth CPC’s structure, since both the sixth and seventh CPCs had four members each. Both the composition of the new commission and the constraints imposed on it will have substantial implications. The composition consisting of a former judge, an academic, and an IAS officer means that the civil service, particularly IAS, representation dominates as the chairperson and part-time academic member are relatively “disinterested” parties. The member-secretary of the fifth pay commission reportedly controlled the information flow tightly by ensuring that no papers, representations etc. were given to the other members except via him.
As a resultant, the academic member had limited understanding of the service conditions, central staffing scheme etc., as revealed in a private conversation towards the end of the CPC tenure. A lack of representation of other major services managing huge departments/ organisations—such as the railways, posts, and defence—has been a perennial issue. That would complicate the implementation of recommendations, like many times in the past.
The economic, fiscal, or financial constraints are an explicit reminder that drastic changes in the wage bill/structure should be avoided. While living within one’s means is age-old wisdom, the times and lifestyles have changed drastically with technology, including artificial intelligence, climate change, and rapidly unfolding innovations. Civil services have been unable to move ahead in or even cope with critical areas. The socialistic, 1:10 mini-max formula of fixing salaries of government employees—including high-level specialists such as scientists, doctors, and innovators—has been a major disincentive for decades.
One recalls the views of a former joint secretary in the expenditure department, who was part of a committee to resolve demands by All India Institute of Medical Sciences (AIIMS) doctors protesting the fifth CPC recommendation of joint secretary-level pay. “How can AIIMS doctors be paid more than a joint secretary to the government?”
Similarly, a former cabinet secretary reportedly told a visiting foreign delegation that his salary was “an unmentionable amount”. Experts who come to briefly serve their motherland at top positions only mention their Indian salaries in a light vein to friends.
The 1:10 formula assumes that defence services chiefs, cabinet secretary, etc. are equal to 10 multi-tasking staff, while the heads of the Space Commission, Atomic Energy Commission and other cutting-edge scientific bodies only deserve 1:9! An impoverished India of 1947 implemented the first pay commission recommended salary based on a mini-max formula 1:36.36. Though top scientists, technocrats, and other highly qualified public officials need not be paid based on a mini-max ratio of 1000 or even 100, as is now the norm in the private corporate sector, the CPC could consider adopting at least the ratio of 36.36 as available in 1947. For managing an aspirational India during fast-changing times an innovative approach to rewarding top talent is badly needed.
The eighth CPC is a high-powered commission. It can draw expertise from the government, corporate sector, academia, and scientific establishments. It has the power to engage with all stakeholders and gain practical knowledge of problems and issues of governance. Given its 18-month time frame, it has time to study the requirements of a modern India. Hopefully, it will come up with innovative recommendations for enhancing state capacity, for effective governance, and to create a matching pool of human resources with talent, motivation, and incentive for governing an aspirational new India.