Centre forms sixth Pay Commission

New Delhi: The Centre on Thursday constituted the sixth Pay Commission.

Headed by Justice B N Srikrishna, the commission would review wages of its nearly 33 lakh employees, whose salaries were last rejigged a decade ago.

The four-member Commission, which has a tenure of 18 months and is to operate from the national capital, would also review the desirability of interim relief for these employees till the final salary structure is announced, an official notification said.

Besides central government employees, it would also recommend new pay structure for armed forces personnel and employees of the regulatory bodies among others -- which is likely to put an additional burden of Rs 20,000 crore on the central exchequer annually.

While the panel's chairman Srikrishna is a retired Supreme Court Judge, its three members also have a reputed background.

Member Ravindra Dholakia is a former IIM, Ahmedabad Director, while the other member J S Mathur is a former secertary of the Expenditure Reforms Commission.

Sushma Nath, who will be member-secretary, was former additional secretary of the department of agriculture.

A Finance Ministry notification said the Government has been considering for sometime, the changes that have taken place in the structure of emoluments of its employees over the years.

Conditions have also changed in several respects since the last pay commission submitted its report in 1997.

With Thursday's notification, decks have also been cleared for setting up of the committee to review the pay structure of PSU employees, official sources said.

However, any revised pay packet for PSU employees will not put burden on the government exchequer since only those public sector companies which have the paying capacity will be increasing salaries of its staff, sources added.

The Commission will also make recommendations for pension, gratuity for those employees appointed before January 1, 2004 as after this date new recruits are under the defined contributory pension scheme instead of defined benefit.

The pay panel will also make recommendations on bonus payment and feasibility of introducing productivity-linked incentive scheme.

It will also suggest ways to transform the central government organisations into modern, professional and citizen friendly entities.

The constitution comes a decade after recommendations of the fifth pay panel were implemented in 1996-97.

The decision on the new pay commission also ignores the word of caution from Economic Survey for 2005-06, which had pointed out that after the previous panel's recommendations were implemented, the general fiscal deficit increased every year to reach a peak of 9.9 per cent in 2001-02.

But the government has said that all efforts would be made to ensure that the Centre and states are not put to financial difficulty as was the case a decade ago.

Efforts would be made this time to see that the increased wage burden was reasonable, appropriate and affordable and in consonance with modern requirements, Finance Secretary Adarsh Kishore said in July after the Cabinet gave its nod to setting up the new pay revision panel.