A Pay Commission is a panel of members of the Union Cabinet of India for review and revision of the salaries of government employees. It was set up by the Central Government

Central government

A central government also known as a national government, union government and in federal states, the federal government, is the government at the level of the nation-state. The structure of central governments varies from institution to institution...

 in the year 1965 and as an administrative committee to determine the salaries of central government employees. Six pay commissions have been set up till date.

History

Since India's Independence, six pay commissions have been set up on a regular basis to review and make recommendations on the work and pay structure of all civil and military divisions of the Government of India

Government of India

The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...

.

First Pay Commission

The first pay commission was constituted in May 1946, and had submitted its report in a year.
and the importance is on the report.
chairman was Srinivasa Varadachariar
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The first pay commission was based upon the idea of “living wages” to the employees, this idea was taken from the Islington Commission and the commission observed that “the test formulated by the Islington Commission is only to be liberally interpreted to suit the conditions of the present day and to be qualified by the condition that in no case should be a man’s pay be less than a living wage." The commission emphasised on the idea of the living wages and stated that the government which is going to introduce the minimum wages legislation for the workers of the private industry should also follow the same principle for its own employees. The commission basically recommended that the lowest rung employee should at least get minimum wages.

Second Pay Commission

The second pay commission was set up in August 1957, 10 years after independence and it gave its report after two years. The recommendations of the second pay commission had a financial impact of Rs 396 million. The chairman of the second pay commission was Jaganath Das.The second pay commission reiterated the principle on which the salaries have to be determined. It stated that the pay structure and the working conditions of the government employee should be crafted in a way so as to ensure efficient functioning of the system by recruiting persons with a minimum qualification.

Third Pay Commission

The third pay commission set up in April 1970 gave its report in March 1973 i.e. it took almost 3 years to submit the report, and created proposals that cost the government Rs. 1.44 billion.
The chairman was Raghubir Dayal. The third pay commission added three very important concepts of inclusiveness, comprehensibility, and adequacy for pay structure to be sound in nature.The third pay commission went beyond the idea of minimum subsistence that was adopted by the first pay commission.the commission report say that the true test which the government should adopt is to know weather the services are attractive and it retains the people it needs and if these persons are satisfied by that they are getting paid.

Fourth Pay Commission

Constituted in June 1983, its report was given in three phases within four years and the financial burden to the government was Rs.12.82 billion. This commission has been set up on dated 18.3.1987 , Gazette of India (Extra ordinary) Notification No 91 dated 18.3.1987,
The chairman of fourth pay commission was P N Singhal.

Fifth Pay Commission

The Fifth Pay Commission was set up in 1994 at a cost of Rs. 17,000 crore.
The chairman of fifth pay commission was Justice S. Ratnavel Pandian.

Financial Impact of Fifth pay commission

With the implementation of the Fifth Pay commission a huge burden was taken up by the central government. It declared hike in salary of about 3.3 million central government employees. Further, it also insisted on pay revision at the state government level. The Fifth pay commission disturbed the financial situation of both the Central and the State Governments and led to a hue and cry after its implementation. The Central government's wage bill before the implementation of the commission’s recommendations was 218.85 billion in 1996-1997 which also included pension dues and by 1999 it shoot up by about 99% and the burden on the exchequer was about to Rs 435.68 billion in 1999-2000.With regard’s to the state government the bill went up by 74%. The state governments which paid about Rs 515.48 billion in 1997 as salaries, had to pay Rs 898.13 billion in 1999 as salaries. This clearly indicates the burden on the state and the central government. Many economists say that about 90% of the revenue of the state went in as salaries. 13 states of India were not in a position to pay salaries to its employees due to the hike and hence the central government’s help was sought.

Other recommendations of the Fifth pay commission

One of its recommendations was to slash government work force by about 30%. It also recommended to reduce the number of pay scale from 51 to 34 and to not recruit to about 3,50,000 vacant position in the government. None of these recommendations were implemented.

Criticisms of World Bank on fifth pay commission

The World Bank criticized the Fifth Pay commission, stating that the Fifth Pay Commission as the 'single largest adverse shock' to the public finance of the nation. It also said that the number of employees of the government was 'not unduly' large, but there was a 'pronounced imbalance' in the skills. It noted that about 93% of the employees were of 3rd or 4th grade.

Sixth Pay Commission

In July 2006, the Cabinet approved setting up of the sixth pay commission. This commission has been set up under Justice B.N.Srikrishna with a timeframe of 18 months. The cost of hikes in salaries is anticipated to be about Rs. 20,000 crore for a total of 5.5 million government employees as per media speculation on the 6th Pay Commission, the report of which is expected to be handed over in late March/early April 2008. The employees had threatened to go on a nationwide strike if the government failed to hike their salaries. Reasons for the demand of hikes include rising inflation

Inflation

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

 and rising pay in the private sector due to the forces of Globalization.
The Class 1 officers in India are grossly underpaid with an IAS

Indian Administrative Service

The Indian Administrative Service is the administrative civil service of the Government of India. It is one of the three All India Services....

officer with 25 years of work experience earning just Rs.55,000 as his take home pay.
Pay arrears are due from January 2006 till September 2008. Almost all the Government employees received 40% of the pay arrears in the year 2008 and balance 60% arrears (as promised by Government) has also been credited in Government employees account in the year 2009. The Sixth Pay Commission mainly focused on removing ambiguity in respect of various pay scales and mainly focused on reducing number of pay scales and bring the idea of pay bands. It recommended for removal of Group-D cadre.

Controversy

Several government services, most notably the armed forces have complained bitterly of downgradation due to pay commissions exceeding their brief, and introducing anomalies in the relative scales of pay of government services. At present, the armed forces have represented to the government for the removal of anomalies which it is felt that the civil servants on the commission have deliberately introduced to upgrade themselves vis-a-vis service officers in the defence forces.

SC constitute a new Pay commission for trial court judges

The chief justice and other supreme court and high court judges got a threefold salary hike in the sixth pay commission however the trial court judges were paid low and a bench comprising Chief Justice K G Balakrishnan and Justices P Sathasivam and J M Panchal constituted a new pay commission for the trial court judges headed by retired Madras High Court judge, Justice E Padmanabhan for recommendation of revision of about 14000 trial court judges. This order from the SC came because of a petition filed by All India Judges Association, which stated that the first judicial commission which was headed by Justice Jagannatha Shetty had said that there should be an upward revision of salaries of lower court judges in proportion to the hike to the judges of high court and Supreme Court. It also sought direction from the cout to the centre for setting up a committee "forthwith appoint a committee of one or more persons to look into the matter" relating the salary of officers in the lower judiciary.

External links

• Official webpage of the Sixth Pay Commission
• Sixth Pay commission Key Points