By Sumarbin Umdor
The recommendation of the 7th Central Pay Commission (CPC) for 23.5 percent hike in salaries of central government employees effective from January 2016 has led to a domino effect with employees of state governments demanding similar pay revision. Many poll bound states like Uttar Pradesh, West Bengal and Punjab have already announced setting up of their own pay commission while others like Kerala is in the process of implementing recently announced pay revision.
State governments follow their own schedule in revision of salaries of their employees. While Tamil Nadu, Gujarat, Maharashtra and Rajasthan adopt the recommendations of central pay commission, others like Andhra Pradesh, Karnataka, Kerala, Haryana and West Bengal constitute their own pay commission. While most states implement pay revision at every 10 year intervals, state government employees of Kerala and Andhra Pradesh are luckier as their salaries are revised every 5 years.
In case of Meghalaya the first pay commission was constituted in 1978, second in 1986 and third one in 1998. The Fourth pay commission was set up in 2007 and its recommendations implemented in October of 2009 with retrospective effect from January 1, 2007. The Fourth pay commission had recommended a minimum salary starting at Rs. 6500 and a maximum salary of Rs. 353300 with 22 levels of pay scales along with allowances such as house rent, hill compensation, medical and for winter months.
The implementation of the recommendations of the 7th CPC will lead to a substantial gap between salary of central and state government employees of Meghalaya. A cursory comparison of salaries of central government employees based on recommendation of the 7th CPC with that of state government employees of Meghalaya without considering allowances shows the pay gap at different levels. In January of 2016 the entry level salary of state government employees at present pay scale will be around Rs. 13400 (at likely revised dearness allowance of 106 percent on January 2016), which is Rs. 4600 less than the entry level salary of Rs. 18000 (for central government employees as proposed by the 7th CPC.
Continuing with the above comparison, a teacher in a state government school will be getting at least Rs.6500 less than a teacher of a central school, while an assistant engineer employed with the state public works department will be drawing about Rs. 10000 less than an employee in a similar post in the central government services. This gap between central state and government salaries would further widen if allowances are also taken into consideration, as state government allowances have always been substantially lower than those paid to central government employees.
This justifies the call for revision of pay and allowances of state government employees to maintain parity with their central government counterparts. However, the demand for pay revision has to be considered against the state government paying capacity particularly in today’s scenario when it is facing the twin fiscal challenges of contraction in revenue generation coupled with drastic curtailment of central grants. Revision of pay by the state government in line with recommendations of 7th CPC will burn a big hole on the exchequer and place severe strain on its already tenuous financial situation.
In 2013-14 the total amount spent by the state government on salary and pension including salary component of grants in aid was about Rs. 2900 crore, which is a little over 52 percent of total revenue on that year. If the trend continues then salary and pension bill in 2015-16 is set to increase to at least Rs. 3500 crore at present emolument structure. For a resource poor state like Meghalaya, this amount is more than double the revenue that the state expects to mobilise internally in 2015-16 or near about the amount the state has budgeted as its enhanced share of central taxes in this fiscal year.
The preempting of such a large chunk of financial resources of the state for meeting salaries and pensions liabilities is at the cost of capital expenditure which goes towards building of infrastructure assets like roads, bridges, power generation and distribution, irrigation networks, transport, sewerage, water supply, education, health, sports facilities, etc. Other casualties of the ballooning salary bill are allocation towards repair and maintenance, capacity building and training and outreach programme. Slashing of the above expenditures has a long term detrimental effect in expansion of state’s productive capacity and effectiveness in service delivery.
However, this is not to argue that the state government employees should not get a pay hike. After all, the demand for salary revision is coming after almost a decade since the last revision and the argument for parity with central government employees a valid reason. The issue here is the need for the government to balance the limited budgetary resources to meet the employees’ expectation without compromising on investment in social sectors and infrastructure. In fact if the state government can mobilise the financial resources, then the pay hike will be a much needed booster for the sluggish state economy which is weigh down by the adverse impact of the bandh on coal mining.
Another important point that needs to be raised here is that the focus of successive pay commissions, both centre or states, has been largely on emolument structure, service conditions and facilities for the employees with scant attention being given to the issue of performance and efficiency of government employees. In Meghalaya ordinary citizens depend on state government departments to delivey basic needs and services in field of education, health, water electricity and livelihood support. Therefore much is expected from government employers who are the main providers of such services, particularly in the rural areas.
However, the sad reality is that the functioning of most state government offices is plagued by chronic absenteeism and the lack of work ethics. The ‘mai-baap sarkar’ culture continues to pervade among majority of government employees with citizens being at the receiving end. Thus, any future state pay commission must address this issue and come up with clear actionable recommendations to transform the government departments into modern, professional and citizenfriendly entities that are dedicated to the service of the people. Further, the state government must have the stomach to implement the measures rigorously for the interest of the people of the state For the above to happen, it would be judicious for the present government to constitute the state pay commission this year itself so that it can consider the demand of the employees in a much calmer environment without the pressure of a looming general election which is due in 2018. (The writer teaches Economics in NEHU)