Pay commission in india
Process of pay commission in india
COMMISSION
The payment of commission as remuneration for services rendered or products
sold is a common way to reward sales people. Payments often will be calculated on
the basis of a percentage of the goods sold. This is a way for firms to solve
the principal-agent problem, by attempting to realign employees interests with
those of the firm.[1]
Commission rates are generally based upon the achievement of specific targets
which have been agreed between management and the salesperson in question.
Commissions are intended to create a strong incentive for employees to invest
maximum effort into their work.
Offering compensation in the form of commission alone is known as straight
commission. Compensation may also take the form of commission plus a fixed
salary. Industries where commission is commonly paid include car sales, property
sales, insurance broking and many other sales jobs.
What is a Pay Commission?
The Pay Commission is an administrative system/mechanism that the government
of India set up in 1956 to determine the salaries of government employees.
The First Pay Commission was established in 1956, and since then, every decade
has seen the birth of a commission that decides the wages of government
employees for a particular time-frame.
The second Pay Commission was set up in August 1957 and gave its report in two
years. The third Pay Commission, set up in April 1970, submitted its report in
March 1973.
The recommendations of the Fourth Pay Commission covered the period between
1986 and 1996. The Fifth Pay Commission covered the period between 1996 and
this year.
The Union Cabinet, under the stewardship of Prime Minister Manmohan Singh,
approved the setting up of the 6th Pay Commission to revise the payscales of
central government employees in July 2006.
The 6th Pay Commission is headed by its Chairman Justice B N Srikrishna, and
has Ravindra Dholakia, J S Mathur and Sushama Nath as its other members.
The Pay Commission was supposed to submit its report in 18 months.
History
Since India's Independence, six pay commissions have been set up on a regular
basis to review and make recommendations on the work and pay structure of all
civil and military divisions of the Government of India
First Pay Commission
The first pay commission was constituted in May 1946, and had submitted its
report in a year. and the importance is on the report chairman was srinivasa
Varadachariar
Second Pay Commission
The second panel had been set up in August 1957 and had given its report exactly
after two years, with a financial impact was Rs.396 million chairman of second
pay:jaganath das
Third Pay Commission
The third pay commission set up in April 1970 gave its report in March 1973, and
created proposals that cost the government Rs.1.44 billion. chairman was raghubir
dayal
Fourth Pay Commission
Constituted in June 1983, its report was given in three phases within four years and
the financial burden to the government was Rs.12.82 billion The chairman of
fourth pay commission was P N singhal.
Fifth Pay Commission
The Fifth Pay Commission was set up in 1994 at a cost of Rs. 17,000 crore. The
chairman of fifth pay commission was Justice S. Ratnavel Pandian
Why was there a hue and cry about the Fifth Pay Commission?
Because the implementation of the Commission's recommendations ravaged the
finances of the central and state governments.
The central government declared salary and allowances hikes for its approximately
3.3 million employees, and insisted that the state governments too revise the pay of
their employees as per the Commission's recommendations.
The result: Before the Fifth Pay Commission recommendations came into effect,
the central government's wage bill (including pension dues of Rs 50.94 billion)
stood at Rs 218.85 billion in 1996-1997.
It shot up by nearly 99 per cent to Rs 435.68 billion in 1999-2000.
What about the state governments?
The state governments' wage bill went up by 74 per cent to Rs 89,813 crore (Rs
898.13 billion) in 1999 from Rs 51,548 crore (Rs 515.48 billion) in 1997.
Economists say that almost 90 per cent of a state's revenues go into paying salaries.
The impact of the Fifth Pay Commission was so brutal that some 13 states did not
have money to pay salaries in 2000.
So peeved were some state governments that last year states like West Bengal,
Bihar, Orissa, Assam, Manipur, Meghalaya and Mizoram sought a mechanism
under which the Centre could not announce a pay revision without consulting the
states.
They also sought the Centre's help in offsetting the impact of the Fifth Pay
Commission and a national wage policy to replace pay commissions.
So the Fifth Pay Commission just recommended hiking salaries of
government employees?
No, and therein lies the problem. The government only implemented the monetary
benefits part.
Some of the Fifth Pay Commission's other recommendations included slashing the
government workforce by 30 per cent; abolishing 350,000 vacant posts and
reducing the number of pay scales from 51 to 34, none of which were
implemented.
The Commission also suggested that the grant of salary hikes to employees be
linked to issues of downsizing government, efficiency and administrative reforms.
Did the Fifth Pay Commission affect the economic reform process?
The jury is out on that. But two years ago, the World Bank held the Fifth Pay
Commission as the 'single largest adverse shock' to India's strained public finances.
The global body said India's civil service was 'not unduly' large, but there was a
'pronounced imbalance' in the skills.
In its review, the Bank added: 'There is a pronounced imbalance in the skills mix
since 93 per cent of the civil service comprised class III and class IV employees for
both the Centre and various states.'
Sixth Pay Commission
In July 2006, the Cabinet approved setting up of the sixth pay commission. This
commission has been setup under Justice B.N.Srikrishna with a timeframe of 18
months. The cost of hikes in salaries is anticipated to be about Rs. 20,000 crore for
a total of 5.5 million government employees as per media speculation on the 6th
Pay Commission, the report of which is expected to be handed over in late
March/early April 2008. The employees had threatened to go on a nationwide
strike if the government failed to hike their salaries. Reasons for the demand of
hikes include rising inflation and rising pay in the private sector due to the forces
of Globalization. The Class 1 officers in India are grossly underpaid with
an IAS officer with 25 years of work experience earning just Rs.55,000 as his take
home pay. Pay arrears are due from January 2006 till September 2008. Almost all
the Government employees received 40% of the pay arrears in the year 2008 and
balance 60% arrears (as promised by Government) has also been credited in
Government employees account in the year 2009. The Sixth Pay Commission
mainly focused on removing ambiguity in respect of various pay scales and mainly
focused on reducing number of pay scales and bring the idea of pay bands.
Implementation cell for sixth pay commission
The finance ministry is understood to have set up a cell to implement by
September, the Sixth Pay Commission recommendations that is awaiting
government approval. Sources said finance minister P Chidambaram approved
setting up of the Implementation Cell "to process and implement the accepted
recommendations of the Commission by September."
The six-member cell set up in the department of expenditure, will be headed by a
joint secretary and will complete its work in six months with effect from April 1,
2008, sources said.
The government had earlier set up a Committee headed by Cabinet Secretary to
process the Sixth Pay Commission report before giving its final approval. Once the
Cabinet approves the report, the cell will implement the report, the sources said.
Ever since inflation rose to a three-year high of over 7%, the government has been
eager to implement the recommendations of the Central Pay Commission report at
the earliest, sources said.
The pay panel has recommended an average hike of 28% in the salary of the
central government employees, which is expected to benefit over 40 lakh persons.
The government is concerned that the armed forces, along with employees of the
Railways and other departments are unhappy with the disparities in the pay
commission's recommendations and have asked the Cabinet Secretary to submit
the report at the earliest.
The implementation cell is also expected to look into timely flow of funds to all the
Ministries, which is estimated at Rs 12,500 crore by the Pay Panel for 2008-09.
The pay panel has estimated that the government would require additional about
Rs 18,000 crore this year towards payment of arrears.
SC constitutes new pay commission for 14,000 trial court judges
If the Chief Justice of India and judges of the Supreme Court and the high courts
got a three-fold salary hike, should the lowly paid trial court judges be left out?
The Supreme Court doesn't think so.
On Tuesday, a Bench comprising Chief Justice K G Balakrishnan and Justices P
Sathasivam and J M Panchal constituted a new pay commission headed by retired
Madras High Court judge, Justice E Padmanabhan, to recommend a suitable
upward revision of the salaries of 14,000-odd judges of the subordinate judiciary.
The Bench requested Justice Padmanabhan to give a report, if possible, suggeting
increased pay-scales for the trial court judges by July 28, when the matter would be
taken up again.
The process of appointment of the Padmanabhan Commission was speeded up
thanks to the undiluted support from amicus curiae and senior advocate Fali S
Nariman to the cause of the lower judiciary, which received support from
additional solicitor general Mohan Parasaran.
This order from the SC came on a petition by All India Judges Association, which
said the first judicial pay commission headed by Justice Jagannatha Shetty had said
that whenever there was an upward revision of salaries of HC judges, the salaries
of lower court judges should also be proportionately revised.
It has sought a direction from the court to the Centre to "forthwith appoint a
committee of one or more persons to look into the matter" relating to the pay-
scales of the presiding officers of the lower judiciary.
After getting respectable salaries for himself, SC and HC judges, the CJI had on
January 7 talked to TOI expressing concern over the low salaries of the lower court
judges. "Their monthly take home is even lower than their counterparts in the
executive," he had said.
The first National Judicial Pay Commission (NJPC) headed by Justice Shetty was
constituted on March 21, 1996, and it gave its recommendations in November
1999. It had recommended a salary hike that entitled civil judge (junior division) a
starting monthly salary of Rs 11,775, civil judge (senior division) Rs 15,200,
District Judge (entry level) Rs 20,800 and District Judge (supertime scale) Rs
23,850.
But, this was recommended keeping in view the then salaries of HC judges which
was fixed at Rs 26,000 a month and that of an HC CJ Rs 30,000, SC judges Rs
30,000 and CJI Rs 33,000.
The salary structure for the higher judiciary recently got changed with the
government agreeing to revise the salary of HC judges to Rs 80,000, HC CJ Rs
90,000, SC judges Rs 90,000 and CJI Rs 1 lakh
