Generally pay hike for the employees is always a welcome step. It brings smiles on their faces and also joy to their family members, specially, when it happens once every 8 to 10 years. This time the 7th Pay Commission’s recommendation approved by the Government of India gives the government staff belonging to all categories including Armed Forces, Railways and all Central Government pensioners across India, an average increase of about 23%. Also the lowest pay has been raised from Rs 7000to Rs 18000, which works out to be about 250%.
Certainly the state governments too will be compelled to implement this report sooner or later. Thus implementation of pay scales will cause a massive fiscal burden of over Rs one lakh crores on the central government alone, although Swiss Credit Agency puts this overall figure to about four lakhs crores, this will cause huge imbalance on CAD (current account deficit), and the same is likely to happen to the state governments finances.
Now what would be the other positive impact of this rise in salaries? It will be wonderful news for the business sector, specially the two and four-wheeler industries, consumer and consumer durable manufacturers, food and beverage makers, bank deposits and real estate, as demand will increase due to extra finances available with lakhs of central and state government employees. But what could be the negative implications for the common men?
To begin with it will give rise to two classes of societies, one with lots more cash in their hands and other like private sector workers with no extra cash in their hands. Finally to meet the financial liabilities there will be each year huge financial outgo from the government coffers.
The Pay Commission will certainly improve the financial fortunes of all sections of the government employees but not necessarily ensure the quality of service and efficiency of their work performance.
So this aspect too should be viewed seriously by the government and bring in some measures to take care of the existing deficiencies in providing better quality of service to the citizens of India. After all the tax-payers are the one who will be footing the big bill.
