Economic
Highlights
New Delhi, 25 March 2013
7th Pay Commission?
NO MATCH FOR INFLATION
By Shivaji Sarkar
At a time
when the Government is pursuing its ban on recruitments, Central Minister Lalit
Maken’s statement supporting the setting up of the Seventh Pay Commission for Central
government employees has come as a shock. It is an admission that all is not
well in an election year thanks to inflation and the Government employees need to
be placated. In short, time to buy votes. Even if this means ignoring the vast
majority of workers in other sectors, who during the February 20-21 had insisted
the Government take tough measures on controlling inflation and did not demand any
wage hike.
The
statement on the Pay panel is indeed bizarre particularly when the nation is
passing through a severe economic crisis, Government’s revenue earning is
becoming critical, borrowings are setting new records, industrial production is
dipping to a new low every day, even the so far thriving automobile sector is
slashing production and a host of workers in other industries, including
banking, are being denied wage hike.
What has
prompted the Government to appear so considerate? It is certainly not the
plight of the employees, who due to raging inflation are suffering over 40 per
cent erosion since 2006, since they got the last pay revision. And there is no
compassion either, The move is crass political consideration in an election
year.
Worse, it is
unmindful of the fact that it would weigh down the country with huge borrowings
and whatever semblance remains in an economy is bound to collapse. The
employees need dearness neutralization. But if inflation, largely fuelled by Government
actions, remains uncontrolled no wage hike would be able to match it.
The UPA Government,
wary of the mood of employees, is paving way for buying their votes. It is yet
another master stroke such as the cash transfer of subsidies, unenforceable Food
Security Bill and similar vote-buying largesse. But sadly all this at the cost
of the future of the nation, which is under threat of liquidation.
Recall, the Sixth
Pay Commission cost the Government dearly – about Rs 20,000 crore in arrears
and almost an equal amount annually. Interestingly, the Railway Budget this
year speaks of coming out of its blues after struggling for over four years.
However, the Government departments and public sector organisations despite
their requirements are unable to recruit new staff because of an internal ban –
a move for government austerity!
New jobs are
not being created in the private sector either. Rather as per Government
reports 19 million workers have lost their jobs during the tenure of the UPA Government.
Existing workers in many industries including the IT and media have not even got
their increments for the past over three years. Wages, in short, are stagnating
across the board.
The Prime Minister’s Chief Economic Advisor Raghuram Rajan is concerned about
the raging inflation. He says that industry is not hiring permanent workers. He
disapproves schemes such as cash subsidies and other “socially-inclusive”
schemes – that includes MNREGA- saying: “We have to tailor the coat to fit the
cloth. Even the relatively better off in this country live in shacks”. He
virtually does not agree that this is the time the Government could dole out
hikes to its existing employees.
A reticent
Reserve Bank Governor D Subba Rao under Government pressure cut repo rate by
0.25 per cent saying high inflationary situation does not allow any leeway for
him. Burgeoning current account deficit (CAD) remains a grave concern for Rao. The
forex crisis is getting graver every day as exports are shrinking. The kitty
may not suffice to fund rising imports. He says:“Even as policy stance
emphasizes addressing growth risks, the headroom for further monetary easing
remains quite limited”.
In all this,
the worker unlike in the decades of 1970s is not responsible for the slowdown.
He is being edged out. The raise in the Government- Central, State and related
areas – is leading to social tension as the wage gap increases.
It was
believed that pay-scales of the government employees decide the floor-level
wages in the other sectors. This has not happened. There have been more casual
and contract jobs since the Sixth Pay Panel report was implemented not only in
the private sector but in Government itself. All Government departments are
employing workers on casual and contractual basis. About one-third of Government
jobs are not on pay-panel terms. In many cases, such workers are paid less than
50 per cent wages. It means even within the Government there is neither fair
play nor wage neutralization. The suffering of those outside its pale can be
imagined.
Indeed, failure
to control inflation is heaping miseries and the Government itself is fuelling
inflation. Two primary causes for inflation have been the continuous tax and petroleum
price hikes. During the past three years, petroleum products prices have almost
doubled. It has increased travel and goods movement cost by over 100 per cent.
Even the Railways, which is running on profit, have increased fares by over 30
per cent even for the lowest class of travel. Freight charges have more than
doubled increasing prices of commodities
further.
Even excise
duties on items such as sugar, service taxes and VAT on food items have been
raised. Fertilizers have become expensive leading to high farm costs. Even
parking charges all over the country, mostly controlled by Government or
semi-government organizations, have quadrupled despite no additional cost on
these. The mafia controlling it is known to give cuts and privatisation of
public services is playing havoc. People are suffering, but the Government
refuses to take action to control inflation.
Ironically,
it has at least one advantage i.e. funds of a political party may have more
than trebled during these turbulent years. State bribing of voters through
MNREGA has paid some dividends to the ruling combine. While employees need a wage
hike doing this only for a section of the workers is not going to be any help. Opposition
parties, fearing the wrath of Government employees, prefer not to oppose such a
move. They need not. But the parties are certainly expected to also voice the
concerns of millions of non-Government workers and farm labourers on inflation.
Freezing
wage hike is not a solution. The Government needs to ensure that its decisions benefit
all-- across the board, if it doesn’t want unrest to spread. With a limited
kitty the Government’s welfare activities have virtually come to a naught.
The Opposition
has to look beyond Government employees--approximately two crore or about 1.5
per cent of the population. An economy that is not burgeoning cannot think of
footing high wage bills for long. Argentina did it and led the
country to a morass. The people want political parties to act with vision and
concern. If they do not, irrespective of their shade, the rise of an Arab-type
uprising, shades being seen in some popular movements, cannot be ruled out. The
Opposition parties need to rise to the occasion and fight inflation, a task
those in Government would not do. More importantly, the Opposition needs to ensure
that it is not seen to be in league with the treasury benches. ---INFA
(Copyright, India
News and Feature Alliance)
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