In a move aimed at putting the demand for the 7th Pay Commission on the government's drawing board, Union minister Ajay Maken has asked Prime Minister Manmohan Singh to set it up this year to neutralise the effect of soaring inflation.

His demand this week is the first voice in support of the panel from within Singh's cabinet.

"Erosion of real wages owing to the degree of inflation... is hurting employees," he wrote in a letter accessed by HT.

Retail prices rose 160% during 2006-2011 but dearness allowance went up only 51%.

Besides, Maken argued, it was time to rework the principles on which public sector wages were fixed in order to attract and retain talent.

He said it was no longer enough to pay employees to simply meet minimum needs.

The finance ministry, struggling to bring fiscal deficit under control, has rejected demands from government employees to set up the panel - generally appointed in the third year of every decade.

Read Maken's letter here