The Sixth Pay Commission, headed by Justice BN Srikrishna, submitted its report to the finance minister, P Chidambaram, on 24 March 2008 recommending over 40 per cent hike in the basic salary of government employees at the senior level. According to the report submitted, the lowest salary a government employee should receive has been fixed as Rs 6,600 and the highest salary as Rs. 90,000.

The salary of all categories of government employees has been revised by the Commission, with effect from 1 January 2006. The educational allowance for employees, who have two children, has been revised to Rs 1,000 from the earlier Rs 100. The HRA for employees living in A-1 cities will be 30 per cent and that of A, B, B-1 cities will be 20 per cent. The current set-up of 35 salary grades has been reduced to 20.

While addressing the media, after the submission of the report, Justice Srikrishna said that given the monetary constraints, it was not possible to please everybody, even though one wanted to give more. “I displeased everyone by giving a little (salary hike) to everybody,” he said. According to him, one major focus of the Commission was to come up with several recommendations to increase the efficiency of the government machinery.

Meanwhile eight central trade unions have raised objections to the pay commission by stating that the recommendations favour officers but neglect junior employees. The armed forces also have vigorously protested against the implementation of Sixth Pay Commission’s report, citing that the lieutenant commanders are placed at a lower pay band than their civilian counterparts. They argue that a force that undertakes most challenging tasks is highly underpaid, resulting in the officers and the lower ranks feeling cheated and humiliated. The IPS Association has also asked the government not to accept pay panel’`s recommendations since it does not meet their demands, including that of parity with the IAS in terms of pay, promotion and other service conditions. The association has threatened to opt for an agitation if its demands were not met.

The centre had constituted the 4-member Sixth Pay Commission on 5 October 2006, to recommend principles and guidelines for wage revision of 33 lakh staff of the central government. The Commission was also asked to look into the desirability and need to sanction interim relief, if any, till the time its recommendations are submitted and accepted by the government. Under its terms of reference, the Commission is to make recommendations for pension and gratuity for employees appointed prior to 1 January 2004 because those recruited after this date are covered under the defined contributory pension scheme.

The normal procedure of the centre is to sets up a pay commission once in 10 years. Prior to this, the Fifth Pay Commission was set up in 1994 during the PV Narasimha Rao government and its recommendations were implemented from 1 January 1996. It takes about two years for the Commission to announce the award. The salary revision exercise includes cadre review, lateral entry, making available promotion opportunities, etc. As this is a sensitive exercise, it cannot be undertaken by a single ministry or an individual. The government, therefore, appoints the pay commission to undertake this gigantic exercise.

The implementation of the recommendations of the pay commission has serious implications on the fiscal health of the centre and the states. Once the pay revision for central government employees is announced, the employees of the state governments also clamour for pay revision on similar lines. The cabinet decision on the pay commission is expected soon.