With an eye on the forthcoming elections, the Centre on Wednesday announced the constitution of the Seventh Pay Commission to revise the salaries and pensions of around eight million government employees and pensioners.
The name of the chairperson and members of the commission, as well as its terms of reference, will be finalised after consultation with major stakeholders. The Centre is also looking at various demands of defence personnel, including the possibility of setting up a separate pay commission for the armed forces, government sources said.
The recommendations of the Seventh Pay Commission are expected to be implemented from January 1, 2016, the finance ministry said. On an average it takes a pay commission around two years to submit its recommendations. The Prime Minister approved the constitution of the Seventh Pay Commission before he left for the United States on Wednesday.
“It is the right of employees to have a Pay Commission... When the recommendations come, the government will be able to implement (it). You do not do something for which you do not have money available,” said commerce minister Anand Sharma.
The Pay Commission’s recommendations are likely to hit the fiscal deficit of the Centre and state governments. But it is something that the next government will have to worry about. However, the Sixth Pay Commission, whose award was implemented from January 1, 2006, was seen as an indirect stimulus to the economy at the time of a global financial crisis in 2008, and it had supported the demand for goods and services.
The First Pay Commission was set up in 1956. Since then, every decade has seen the rebirth of a commission. The Fourth Pay Commission was implemented in 1986, and Fifth Pay Commission was implemented in 1996.
The announcement on setting up a pay commission comes ahead of Assembly elections in five crucial states, including Delhi, Rajasthan and Madhya Pradesh in November, and the general election next year. Delhi, being the national capital, has a large presence of government employees.
The announcement on setting up of the commission also comes days after the BJP held a large rally of retired armed forces personnel at Rewari.