With an eye on the next general election, the UPA government gifted its 55 lakh employees an Independence Day pay bonanza of Rs22,131 crore.
Experts say increase will dent govt finances, delay inflation control
NEW DLEHI: With an eye on the next general election, the UPA government gifted its 55 lakh employees an Independence Day pay bonanza of Rs22,131 crore - a move that left even the authors of the Sixth Pay Commission stumped.
With the Union budget already reeling under the combined burdens of oil subsidies, farm loan waivers and high interest costs, the cabinet decided to add to its fiscal woes by approving an average increase of 21% in the salaries of civil and defence staff, a figure that’s even higher than what the Pay Commission headed by Justice (Retd) BN
Srikrishna recommended. “We had long discussions on facts and figures with the finance department and economists to see how much elbow room the government had and suggested the best possible increase. Now the government has decided to exceed that. All the best to them,” Justice Srikrishna remarked to DNA.
The pay hike will increase the salary bill of the government by Rs17,798 crore annually and cost it Rs29,373 crore in arrears effective January 1, 2006, information and broadcasting minister PR Dasmunsi told reporters after the cabinet meeting on Thursday.
The cost to the exchequer in 2008-09 will be Rs22,131 crore (Rs15,717 crore on the general budget and Rs6,414 crore on the rail budget).
The pay hikes would be given from September this year. The arrears would be paid in two instalments of 40% and 60% in 2008-09 and in 2009-10, respectively.
Consequent to the hike, the lowest stratum of government employees would draw a monthly net pay of over Rs10,000 (including allowances) — made possible by the cabinet’s revision of its basic pay to Rs7,000 from Rs6,660 as recommended by Srikrishna. Also, the rate of annual increment has been increased from 2.5% to 3%.
Special attention has been paid to defence personnel, who had raised objections to some of the earlier recommendations. Navy chief Admiral Sureesh Mehta welcomed the announcement and said it has been received with “interest” by the armed forces.
“Even as more details are awaited, prima facie all the concerns of the defence forces appear to have been suitably addressed,” he said.
For one, the cabinet has increased military service pay (over and above the monthly pay). For the lower rungs, it will now be Rs2,000 and for officers Rs6,000. The lower limit of disability pension has been doubled from the existing Rs1,550 to Rs3,100.
Also, the modified assured career progression entitles all employees to at least three time-bound promotions, which for defence staff will come after eight, 16, and 24 years and for civilians after 10, 20, and 30 years.
While mid-level defence officers, including colonels and brigadiers, have now been bracketed in the highest pay band, senior lieutenant generals — till now overlooked for promotions because of a lack of residual service — can look forward to a grade equivalent to that of a secretary to the Government of India.
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