UPA goes to polls armed with 7th Pay Commission

In a sop to its employees ahead of the elections, the UPA government on Wednesday announced the setting up of the Seventh Pay Commission.

The move will directly benefit 50 lakh central government employees, including those in defence and railways, and 30 lakh pensioners.

The recommendations of the new pay commission, which will be constituted shortly, will be implemented from January 1, 2016, finance minister P Chidambaram said in a statement.

The recommendations of the Sixth Pay Commission were implemented in 2008, with arrears of two years. Normally the commission is announced after every 10 years. It is for the first time that an announcement has been made in advance to rope in government employees.

The announcement comes just ahead of the model code of conduct for elections coming into force in the next two or three days for the Delhi assembly elections.

The names of the chairperson and the members and the terms of reference of the commission will be finalised soon after consultation with stakeholders.

Experts, meanwhile, argue that if not coupled with reforms, the move may boomerang and stoke inflation further. “The government at this juncture should also focus on reforms in improving the supply side economics and supply chain management because increase in income levels without adequate infrastructure and supply scenario could lead to higher inflation. So, going ahead, reforms in supply side scenario should also go hand in hand with the increased income levels,” said Suman Jyoti Khaitan, president, PHD Chamber. 

Among the government departments, the ministry of railways has welcomed the move to set up the commission two years in advance. “It is good for the railway ministry because we will not have the sudden liability of arrears, which eat heavily into the railway finances.

In case of the last commission in 2008, we had to shell out Rs10,000 crore as arrears as the recommendations were effective from 2006,” said a senior ministry official.

Immediately after the announcement, Congress went gaga, saying it was a happy day for central government employees close to the festival season. Congress chief spokesman Ajay Maken, went a step further to point out how the BJP-led NDA government had rejected the legitimate formation of the previous pay commission.