6th Pay Commission to see pay hikes by 40%

The Sixth pay commision's report has been submitted to the Finance Minister. The expected outgo to the exchequer is around Rs 13,000-15,000 crore.

We understand from sources that there will be no internal relief. The average increase in basic fair pay for all government employees will be in the region of 40-45%. This is a very rough average because for senior level officers, like the Cabinet Secretary or officials at the secretary level, the payback could increase by more than 50%.

We understand that secretaries to the Government of India could draw anything between Rs 75,000-80,000 per month. The Cabinet Secretary could draw something like Rs 85,000-90,000 per month. Even junior level officers could start of at Rs 15,000-20,000 per month.

So, this is obviously a huge bonanza which translates to roughly Rs 13,000-15,000 crore. However, the report is yet to be made public. The Finance Minister might release a summary of the report or brief the media later in the day.

The objective of the Sixth Pay Commission is really two-fold. One, it wants to showcase what the UPA has achieved in Election Year. Off late, we have seen a brain drain from the government sector to the private sector, a recent high profile example being that of the ex-Finance Secretary who is now the Head of an Indian auto company. The second reason for this release could be to stem the reverse brain drain, so that it doesn’t happen because of low salaries in the government sector.

The Pay Panel has recommended a new pay scale from January 1, 2006. The existing HRA would be retained for A1 cities; while there would be a 10-20% hike for other cities. The maximum government salary would be at Rs 80,000 per month, while the minimum would be at Rs 6,660 per month. The recommendations would cost the Government Rs 12,561 crore in FY09, the Panel has noted. It has said that there would be a one-time burden of Rs 18,060 crore on arrears. Pensioners would get 50% of the last pay drawn, the Panel estimates. It favours 2.5% annual increment in salary.