New Delhi : Even as the Seventh Central Pay Commission (CPC) is likely to submit its recommendations relating to revision of remuneration of Central government employees and pensioners, to Union Finance Minister Arun Jaitley this week, several States have raised concerns over huge financial burden which it would have on them. Sources have indicated that the Seventh CPC may recommend 15 per cent increase in salaries. The recommendations would need the Union Cabinet approval for implementation from January 2016. About 48 lakh Central government employees and 54 lakh pensioners will be impacted from the Seventh CPC recommendations.
Interestingly, in their response on the Seventh CPC, several State governments had flagged concerns of additional financial impact which the recommendations of the CPC would have on them. Particularly, the response of Gujarat government was the most pointed, sharp and not in favour of the CPC. In its note, the state government said the cost on salary was about Rs 28,000 crore at present which was likely to shoot up in 2015-16. The Gujarat government, then headed by Chief Minister Narendra Modi, said that the financial burden of the Seventh CPC will be substantial. It contended that the constant increase in salary by the Pay Commissions has resulted in a lot of labour market distortion in the economy vis-a-vis private sector salary. The state government said that due to increasing salary, governments take recourse to contract appointment, thus two different categories of employees have been created which is bound to create social and legal problems.
“Any drastic increase in revenue expenditure due to pay revision will severely affect the ability of the State to maintain healthy revenue surplus. The fiscal space of States is already constricted due to impact of global and economic slowdown on tax revenue,’’ it said. Favouring linkage of the pay structure with productivity and performance, Gujarat government said the Seventh CPC must address the restructuring and cutting of administrative flab.
West Bengal government pointed out that it would be under pressure to set up its own Commission and added that it was debt-stressed and could ill-afford huge financial implications. West Bengal and Karnataka governments sought 100 per cent financial assistance from the Centre to bear the burden of the CPC. Manipur and Punjab too expressed concern over huge financial burden which the 7th CPC would cause while U.P. favoured higher pay structure being linked to performance and quality of output and Bihar government said it would implement the 7th CPC recommendations with modification and also sought 50 per cent Central assistance for the extra burden.
Earlier, Finance Ministry had said that the Seventh CPC will be mindful of the fiscal concerns of the government while giving its report. The commission, headed by Justice A K Mathur, has time till December 2015 to give its report. It was set up in February 2014 by the previous UPA government to revise remuneration for the Central government employees and pensioners.
