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'40 per cent hike for Central Govt staff'

The Sixth Pay Commission submits its report to Finance Minister P Chidambaram on Monday morning, reports KV Lakshmana.

business Updated: Mar 25, 2008 02:14 IST
KV Lakshmana

With elections around the corner, central and state government servants can look forward to good times ahead. The year 2008 promises fatter pay packets and higher perks if the Centre accepts the Sixth Pay Commission recommendations submitted on Monday.

Tamil Nadu and Haryana have already budgeted for pay hikes to match central scales. While Tamil Nadu Finance Secretary K Gnandesikan said it would be premature to calculate the exact financial impact, Haryana Finance Minister Birender Singh has made a provision of Rs 1,550 crore in his budget proposals. “The allocation has been made on the basis of an estimated 35 to 40 per cent salary increase. We have already declared that we will implement the salary hike in the state,” he said.

Gujarat may follow suit, although it has not yet estimated the exact additional outgo. “The recommendations have just been submitted. We can estimate any burden only after the new pay scales come to us,” said Finance Secretary (Expenditure) AK Joti.

Kerala Finance Minister Thomas Issac said: “We don’t want to put an additional burden on the state exchequer. We are not in a position to toe the central line.” The state had revised its employees’ salary in 2004 and religiously increases salaries every five years.

Orissa came up with a cautious response with its Finance Minister Prafula Ghadei deciding to set up a committee to go into the financial implications. According to officials in the department, with arrears from 2006, the state has to cough up nearly Rs 4,500-5,000 crore to implement the report.

Seven of the total 29 states — Delhi, UP, Punjab, Haryana, Gujarat, Himachal and Tamil Nadu — pay central government scales. The others stick to their own pay structures and revise them according to the recommendations of their respective pay commissions every five years. But there is definitely a demonstrative effect on the state governments, besides pressure from government employees for pay parity. The first such demand came within minutes of television channels flashing the news in Bihar.

Bihar Engineering Services Association secretary general AK Jha ‘Anal’ said: “It has been decided that the Bihar government will give central pay scales and perks. We are going to demand that the government honour its commitment.” Finance department officials said implementing the report would adversely affect the state’s financial position.

Madhya Pradesh employees will have to wait till next year. The pay committee set up in February is to submit its report this December. Finance Minister Raghavji Bhai said the financial condition of the government was sound enough to offer a better pay revision.

Uttar Pradesh Special Finance Secretary Arvind Narain Mishra said: “It is for the state cabinet to take a decision on implementation of the proposals of the Commission. The cabinet will also decide if the proposal of the pay panel is to be implemented from 2006, 2007 or 2008,” he said.

States are in a much better financial position today, compared to the period between 1996 and 2000, when they were getting a smaller share of taxes from the Centre and had no control over their expenditures, said M Govinda Rao, director, National Institute of Public Finance and Policy, New Delhi. His colleague Amarnath summed up his analysis of the impact of the Commission’s recommendations by saying “it will have no impact at all as most of the states are better off today than before”.

(With inputs from HT Correspondents in Bhopal, Chennai, Chandigarh, Thiruvananthapuram, Ahmedabad, Patna and Bhubaneswar)