A miserable 2 per cent – An enlightening article by Vinod Rai on the 7th Pay Commission
The
article ‘A miserable 2 per cent‘ written by Shri. Vinod Rai, former
comptroller and auditor general, and presently the chairman of Banks
Board Bureau appeared in The Week magazine (24th July edition).
In
the article, Shri. Vinod Rai clears up the myth of the supposedly
‘hefty’ pay hikes that the government ‘babus’ would receive on account
of the 7th Pay Commission recommendations.
A miserable 2 per cent
On
June 30, headlines across newspapers were on the Union government
having approved the Seventh Pay Commission recommendations. The Economic
Times headline read, “Central staff hit pay dirt: An early Diwali”. The
newspaper said the government had accepted the recommendations doling
out ‘hefty’ pay hikes. The salaries were expected to increase in the
range of 14 percent to 23 per cent. The bold fonts also announced that
the lowest salary was to increase from Rs.7,000 per month to Rs.18,000.
The highest salary, received by the cabinet secretary, was to go up to
Rs.2,50,000 from Rs.90,000.
Sounds huge, does it not? But we need
to analyse this. What is the bonanza and what are the hefty pay hikes
which are speculated to be “fuelling inflationary pressures”?
Actually,
the salary of Rs.7,000 and Rs.18,000 are not comparable. The equivalent
of the Rs.7,000 basic salary. which was fixed 10 years ago and
currently applicable with the dearness allowance added on, is Rs.15,750
(Rs.7,000 basic plus 125 per cent DA). In the salary of Rs.18,000 now
announced, the DA is subsumed. Thus, a more accurate comparison would be
the present salary of Rs.15,750 and the new salary of Rs.18,000.
Similarly, the cabinet secretary at present receives Rs. 2,02,500. The
newspapers also announced that the total outgo as a consequence of the
hike was expected to be Rs.1 lakh crore.
The comments on social
media are more expressive! They question whether government employees
actually deserve higher salaries: “Being paid more for what?”, “More pay
for less and less work”, and “Babus don’t deserve a hike.” In fact, it
is speculated that these increases will fuel inflation. Another school
of thought believes that it will kickstart spending, thus generate
demand and hence increased economic activity.
The Pay Commission
is announced once in ten years. Thus any increase in basic salary comes
about once in ten years. Even if we were to assume that this Pay
Commission has brought about a hike of 20 percent, it would tantamount
to a simple rate of2 per cent per annum. Which employee in the private
sector would be content with a 2 per cent per annum hike? A couple of
years ago, I was pleasantly surprised to hear of the bonus received by
one of the youngsters in the family. I found that his annual bonus alone
was more than the sum of the total salary earned by me over my entire
career! He could afford at least two vacations abroad for himself and
his kids every year, travelling business class. My wife and I have never
been on any vacation as yet. At most, every year we visited our parents
using up my earned leave or she would accompany me if I travelled on
work. For him the weekend is a total break from work—he gets no official
calls over the weekend. Mine was a 24×7 job when I could not refuse
anyone who called me. Once when my wife reminded the caller that he had
called on a holiday, he had the gumption to remind her that official
phones were given to government functionaries so that they could be
contacted all the time!
There is then the fear that the pay
increase will cause financial difficulties to state governments. True,
it will. However, prudent financial management requires constant
mobilisation of resources. However, considering the fact that we have
just about an election every year, to local bodies or state legislatures
or the general election, very few governments can take appropriate
measures to increase taxes or tap methods to raise resources. If you
cannot take harsh decisions to raise resources, why blame government
employees who get a paltry increase of2 per cent per annum? I
acknowledge that government employees are not the most popular guys. To a
large extent, we are to blame for this. This perception needs to be
addressed and only we can do that with our own endeavours and actions.
However, if the general public still continues to grudge the paltry
increase, they must realise that if you pay peanuts you get only…. !
Former comptroller and auditor general, Rai is chairman of Banks Board Bureau.
