The festive season this weekend will bring extra cheer to 55 lakh Central government employees as the Sixth Pay Commission is likely to recommend an increase of up to 42% in their salaries and pensions when it submits its report on Thursday.
While the number of salary grades will be pruned to 18 from the existing 33, the basic salary proposed is 35 to 42% higher than what each employee currently gets, inclusive of dearness pay and dearness allowance.
The house rent allowance will become city-specific with those living in metros getting the full 30% of the basic salary. But for other towns, the HRA could be capped at 15% of the basic salary.
The commission is also expected to recommend the delinking of pay from post so that an employee would get higher scale at fixed time intervals. That is, he need not await his promotion to become eligible for the next salary grade.
This was one of the suggestions by the Department of Personnel & Training which had argued that while there would be stagnation in promotion, the employees should not be devoid of pay hikes.
There would be performance-related pay for scientists so that they could be put on a fast track to reverse brain drain. These fast performers would be shifted to contractual agreement with their salaries coming from the project money.
Although the government is free to accept or reject all or part of the commission’s recommendations, considering that the UPA government has entered election mode, the revised pay packets could get approved.
Incidentally, as first reported in The Indian Express, the Finance Ministry has been working out numbers assuming an average 20% increase in salaries and pensions with past payments from January 2006 to the implementation date tucked away into GPF to bring down the instant payout.
This 20% translates into an increase in the wage and pension bill by Rs 11,500 crore.
Finance Minister P Chidambaram provided for Rs 26,657 crore or 0.5% of the fiscal deficit as the “headroom,” but the margin reduced after a supplementary demand for Rs 10,000 crore for the loan waiver of farmers.