HISTORY OF PAY COMMISSION IN INDIA

History of Pay Commissions in India

The concept of constitution of Pay Commissions for revision of pay scales of Central Government employees is peculiar to India and no other country in the world is following this pattern of specified periodical revisions as an established mode of such revisions.

The Government of India constitutes, as a matter of convention, Pay Commissions every ten years to review and make recommendations on the wage structure of Central Government employees including Defence personnel and Railway employees and the Pensioners. The Pay Commission, depending on the terms of reference, shall examine various aspects such as pay and allowances, retirement and death benefits, conditions of service, promotion policy and such other related matters and submits its recommendations to the Government, who will take the final decision as to its implementation, which may be full or partial or amended of modified.  The Chairman and Members of the Pay Commission shall be nominated by the Government. The so far followed practice for constitution of the Pay Commission is at periodical intervals of 10 years as is seen from the constitution of such Commissions in the past. It is not mandatory for the Government to constitute the Pay Commission as is seen from the fact that inspite of the Employees’ demanding for constitution of Pay Commission during the year 2003, the Vajpayee government has turned down their demand.

Prior to the constitution of the First Pay Commission in 1946, the 1934 pay scales were continued.

First Pay Commission

The First Pay Commission was constituted in May 1946 under the Chairmanship of Sri Srinivasa Varadachariar. Taking inspiration from the Islington Commission Report of 1912 under the Chairmanship of Lord Islington, the concept of living wages meaning that in no case an employee’s wage be less than the living wage, was taken into consideration in formulating the recommendations of the First Pay Commission. The Commission has fixed Rs.55, of which Basic Pay was Rs.30 and DA Rs.25 as the minimum wage. The recommendations were accepted by the Government.

Second Pay Commission

The Second Pay Commission was set up in August 1957 under the Chairmanship of Justice Jagannath Das and the Commission took two years to finalize the report. One of the recommendations of the Commission was that the pay structure and working environment of the government employees should be crafted in such a way as to ensure efficient functioning of the system by recruiting persons with a minimum qualification, which was earlier not followed. The Commission recommended the minimum wage at Rs.80 (Basic Pay Rs.70 and DA Rs.10) per month and reduced the multiple numbers of pay scales.

Third Pay Commission

The Third Pay Commission was set up in April 1970 under the Chairmanship of Justice Raghuvir Dayal. It went beyond the idea of minimum subsistence and added three concepts of inclusiveness, comprehensibility and adequacy for pay structure to be sound in nature as to be attractive to the employees, which, the Commission felt that it would improve the efficiency of functioning of the Government machinery. It recommended the minimum wage at Rs.185 per month and the Government raised it to Rs.196. Pay fixation formula was made more liberal. The Commission gave its report in March 1973.

Fourth Pay Commission

The Fourth Pay Commission was constituted in March 1983 under the Chairmanship of Sri P.N.Singhal. It recommended for creating permanent machinery as part of the administration to undertake periodical review of pay and allowances of the employees. However, it was never implemented by the Government. It recommended for minimum wage of Rs.750. It took four years and submitted the report in three phases. The report was implemented with effect from 01.01.1986.

Fifth Pay Commission

The Fifth Pay Commission was set up in 1994 under the Chairmanship of Justice Ratnavel Pandian. The Commission recommended for fixing the minimum wage at Rs.2550 per month, to further reduce the number of pay scales from 51 to 34 and to slash the government workforce by about 30% with grant of salary hikes to the retained employees. It took 4 years for the Commission to submit its report. During this period, the Government of India was in take-off mode with the concept of LPG (Liberalisation, Privatisation and Globalisation) in its economic reforms, for which it has to look to the World Bank and IMF and thus the World Bank has opened its mouth with criticism on the after effects of the Pay Commission recommendations on the Indian economy.

Sixth Pay Commission

Sixth Pay Commission was set up in July 2006 under the Chairmanship of Justice B.N.Srikrishna with a time frame of 18 months. While formulating pay scales with upward revision and fixing the minimum salary at entry level at Rs.6660 (Basic Pay Rs.4860 and Grade Pay Rs.1800) and maximum at Rs.80000 at Secretary level, the Commission mainly focussed on removing ambiguity in respect of the existing pay scales and, introducing the idea of ‘Pay Bands’, while reducing the number of pay scales. It recommended for removal of Group – D cadre.

Seventh Pay Commission

The Government of India constituted Seventh Pay Commission on September 25, 2013 and the recommendations of the Commission are likely to be implemented with effect from 1^stJanuary 2016.While hailing the decision of the Government, the Employees’ Unions have demanded for implementation of the Commission’s recommendations to take effect from 1^stJanuary 2011 in the same pattern as with the conventional periodical wage revisions for every 5 years in Public Sector Undertakings. The Commission shall study the structure of salaries of different cadres of the 50 lakh Central Government employees and 30 lakh Pensioners and recommend for upward revision of scales and allied service matters.Constitution of the Chairman and Members of the Commission shall be taken up in due course of time.

During the year 2008, the three wings of defence forces have requested the Central Government to rectify the discrepancies in the pay scales of defence personnel. They felt that since the Defence Forces are expected even to sacrifice their lives in their normal duties, there should be some variance in the pay scales of Civilian employees and Defence personnel.  Similarly, they demanded that the proviso of ‘one rank – one salary’ and ‘one rank – one pension’ should be implemented in the defence forces. After passing though different phases, in the year 2009, Prime Minister Manmohan Singh informed the Defence department that a special Pay Commission would be constituted for Defence Personnel  and a strong belief has emerged that a separate Pay Commission will be constituted in the background of the notification for 7^th Pay Commission. But, the Chief of Air Staff has expressed in his current letter to the Defence Minister that there is no need for a separate Pay Commission for Defence Forces and that it would be enough if reasonable representation of the Defence cadres is provided in the 7^th Pay Commission.

Comments

Constitution of the 7^th Pay Commission is not devoid of any criticism. Media feels its timing of the constitution of the Pay Commission is so announced that it is a ‘caret and stick’mode of bait to the Government employees, including Defence personnel and Railway employees in the background of the approaching Lok Sabha elections next year and elections to the State Assemblies of 5 states in November this year.

Industry circles felt that there is every possibility of increased rate of inflation apart from the additional financial burden on the government with notification of 7^th Pay Commission. ASSOCHAM Secretary General Mr. D.S.Rawat dubbed that if the Central Government substantially increases the salaries, the funds at the disposal of the Government would deplete and the pressure of inflation increases. He further stated that by the time the recommendations of the 7^th Pay Commission are implemented by January 2016, the financial burden in the implementation of the Food Security Act and Employment Guarantee Scheme would also increase. He questioned whether it is necessary for the Government to perennially go on fighting with Fiscal Deficit.  PHD Chamber of Commerce President Mr. Suman Jyothi Khaitan felt that the Government should concentrate on implementation of reforms for improving the financial segment and management of distribution sector and increasing the income status; and further felt that without providing the needed infrastructure and distribution sectors, economy would ultimately lead to severe inflation.