India News and Features Alliance (INFA) - Save Wasteful Expenditure:NEW PAY PANEL AND DEVELOPMENT,Vinod Deepak,27 February 2006

Prime Minister Manmohan Singh’s announcement to set up another pay commission for the Central Government employees has sparked off a hot debate, highlighting the pros and cons of the decision. Unfortunately, some have criticized it merely for the sake of criticism and without going into the actual facts and figures.

Undeniably, the financial impact of the Sixth Pay Commission would be staggering, both for the Centre and the States Governments. After implementing the Fifth Pay Commission recommendations in 1998-99, the annual wage bill of the Centre crossed a whopping Rs.10,000 crore. This has, no doubt, broken the back of India’s economy with many States unable to pay even the salaries of their staff. The impact of a further upward increase in salaries – even if 15 to 21 per cent – will impose an additional wage bill of Rs.6,000 crore on the Centre alone.

It remains to be seen how the Government will square this bonanza with the commitment to eliminate revenue deficit by 2008-09 and reduce fiscal deficit to 3 per cent from the budgeted level of 4.3 per cent this year. Moreover, it would be very difficult to achieve 10 per cent growth rate as promised by the Prime Minister, with the expected additional financial burden on the national exchequer.

The Union Government’s total workforce is around 38 lakh, of which 15-16 lakhs are in the Railways and an equal number is working in Defence. In other words, over 30 lakh personnel constitute the Ministers of Railways and Defence and the rest, a measly 6-7 lakh, are in about 500 Ministers and Departments of the Union Government, scattered all over the country.

The services of the employees of both Railways and Defence are indispensable and are of paramount importance. Their services cannot be dispensed with since the Railways, the biggest public sector enterprise, serves as a backbone to the national economy. It is also the biggest revenue-earner for the Government. Even one day’s strike by the Railway staff is enough to cause insurmountable financial loss to the national exchequer, besides creating chaos in the whole country. Almost all business and financial activities are rested on the shoulders of Indian Railways. Perhaps, with this view in his mind the economist Prime Minister has yielded to the long-pending demand of the unionized Railway employees. They had threatened to go on a nationwide strike if the Sixth Pay Commission was not set up early.

Similarly, the defence personnel, mostly posted in trouble-torn areas, are guarding our boundaries. National security is not negotiable and, therefore, the valuable services of our military and para-military forces cannot be weighed in terms of financial benefits extended to them. They work under immense stress and in highly trying climatic conditions that any amount of money to them would be justified. Therefore, the nation would not be losing anything while increasing pay packets of the employees. Instead, it would immensely add up to their morale efficiency and devotion to duty.

Now comes the question of the remaining 6-7 lakh employees posted in various ministries and departments of the Government. The general argument that they are over-paid and under-worked is untenable. Like private sector, an average government employee is equally devoted to his duty and is always prone to hire and fire. However, unlike his counterparts in the private sector, he is very poorly paid. With the process of privatization entering the government sector, he has also lost his much-hyped job security.

Whatever appears from outside, a government employee is subjected to more stringent official rules and regulations. His earning from salary and other allowances is taxed there and then even as the government generally fails to realize huge taxes from lakhs of big wigs in the private sector. With the prices of almost all essential commodities escalating day by day, an average wage earner finds it hard to make his both ends meet.

Gone are the days when government job was considered as a life with luxurious comforts. Now it is the other way round. It is like stagnated life without promotional avenues. Moreover, with the amendment in pension rules, which stopped any pensionary benefits on recruitments made after the year 2000, the Government has virtually made its service look like a private one.

It is not that the successive Governments have not curtailed certain benefits to the employees in the name of austerity measures. A blanket ban on fresh appointments, reducing interest rate on GPF from 10 to 8 per cent, increase in working hours, bringing even a petty clerk in the tax net, restricting Over Time Allowance (OTA), abolishing posts vacant for more than one year, closing down many redundant departments and merging like-natured divisions, are some of the measures taken by the Government after implementation of the 5^th Pay Commission recommendations.

The recommendations of the Geeta Krishna Committee – also known as Expenditure Reforms Committee (ERC) – on reduction of 30 per cent Government staff has been implemented to a large extend and the process is still continuing with the abolition of a large number of posts in almost all ministries and departments. But the same method is not applicable to the Ministries of Railways and Defence where new recruitments are being made in view of the heavy load of work. It means to say that the axe is falling only on the 6-7 employees who have come to be seen as an eyesore.

But now when almost every government office has been computerized and the Right to Information Act is in force, its working has become more transparent and accountable. Still there is always a room for administrative reforms from top echelons of the bureaucracy otherwise the people will continue to believe that their money is being squandered on the babus.

No doubt the prevailing work culture in government offices needs to be drastically reformed and the Government must be in a position to extract work commensurate with the pay packet. Government staff will have to be more responsive and accountable in view of the changed national scenario. Corruption in government offices must be dealt with sternly as it would bring efficiency in their work.

Lastly, if the Union Government was so serious in reducing its workforce, one wonders why the retirement age was increased from 58 to 60 years? Had it been 58, over 30 per cent of the staff would have gone much earlier. It is still not too late, as it would ceremoniously show the door to several lakh employees on the verge of retirement.

Secondly, why does the Government not come out with an attractive Voluntary Retirement Scheme (VRS), like the one once offered by banks and public sector undertakings which facilitated exit of a large number of employees to cut down the size of its staff. If a positive and attractive VRS is offered, undoubtedly a large number of employees, especially the youths who feel stagnated and virtually killing their talent in the government sector, will opt out on their own to start their new ventures.

The need of the hour is to generate additional funds from sources hitherto unexploited and untapped and by checking wasteful expenditure on pompous shows, luxurious foreign trips and by making sure that every penny earmarked for development is properly utilized and not squandered by unscrupulous elements both in government and private sector. The government servants should be the last resort for ushering in austerity measures! –INFA.