Pay more, but also reform

A substantial increase in government salaries has been long overdue, and the government should accept the broad thrust of the Sixth Pay Commission's recommendations without delay. The elite administrative services stopped attracting the best students years ago, and the armed forces have faced a severe shortage of candidates for their officer corps. Salaries in the private, organised sector have been going up by about 15 per cent a year for the past five years (thus doubling in this period); over the decade between the dates of implementation for the Fifth and Sixth pay commissions, private salary levels have more than trebled, and at senior levels quadrupled. So when the Srikrishna panel recommends a rough trebling of pay (in some cases not even that) for senior officers, compared to the 1996 level, it is not even restoring the old ratio between private and government salaries (equalising them is not possible, and not necessary either).

The Pay Commission chairman has explained that he has had to keep in mind the government's ability to pay, which is fair enough. After all, the last Pay Commission award and its mimicking by state governments resulted in the total government pay and pension bill increasing by about 1.6 per cent of GDP, which in turn caused a sharp deterioration in the state of government finances. The bill this time is likely to be very much less "" if one sets aside the issue of arrears, the Rs 12,561 crore increase in the annual Central bill, if matched by the states, will result in a combined increase of barely 0.5 per cent of GDP. That is certainly affordable.

The country needs good governance, and therefore good government servants. One of the tragedies of recent years is that, even as the corporate sector has grown in strength, governments have deteriorated "" witness the failure to deliver the basics in health and education, the mess in the cities, the leakages in government programmes, the spread of corruption and its scale change, the politicisation of the civil service, the quality of legislative drafting, the decline in the spirit of public service, and much else. While this bleak map is relieved by a few bright spots, especially some of the special purpose vehicles (like the Delhi metro railway, and once upon a time the National Highway Authority), the harsh fact is that government structures, procedures and performance levels cry out for change.

These issues need to be addressed by the Administrative Reforms Commission. What the Pay Commission can suggest by way of remedies on the margin, it has done "" a higher incentive slab for the top performers, provisions for lateral entry and early exit, abolishing the lowest level of D category employees (the old Class IV), reducing the number of holidays, paying extra for specialists including market regulators, breaking free from the philosophy of the government running a mini-state that provides services to government employees (like the Central Government Health Service) and moving more towards market-based service delivery, and so on. Some of these are easy to implement, others will require changes of administrative culture "" most people outside the government do not recognise how dependent the system is on its D category employees, and it is not clear whether the services they provide will be eliminated through administrative changes, or whether their work will be outsourced through contracts to service providers.

Also, the abolition of all religious holidays may be difficult to implement ""how many people will actually volunteer to work during Holi or Diwali, and if a handful do, will the entire establishment have to be kept going for them? Meanwhile, the one area where the Pay Commission could have gone further is in increasing sharply the house rent allowance "" instead of 20 per cent in the big cities, it should be 50 per cent or more if there is to be some relationship to rent levels in the market. This would take away another vestige of the colonial era, the notion that the government must own and provide housing for its employees in government "colonies" ""something that no modern state maintains in established towns and cities that have a rental market.