The government has announced the acceptance of the 7th Pay commission recommendations and central government employees will see an increase of 23%+ in their pay. The 6th Pay Commission gave a much higher raise ten years ago. At that time, there was a disparity between the compensation in the market and what the government paid its employees. So this large hike corrected that to some extent.
This time, the hike at the top level is reasonable considering the responsibility and stress the top bureaucracy shoulders in a fast-paced world. But the hike at the entry level and for certain categories is way above the market - a driver with five years experience would get Rs 35,000+ per month, a high figure compared to the market. Of course, the job comes with job security, great terms, a funded pension, and yearly increases including inflation indexation.
As it did ten years ago, the union government is expected to incur a very heavy burden of around Rs 1,35,000 crore per year including the increase for pensioners. Life expectancy has gone up and an increase in pension will need to last over a longer period. If all states begin to follow the same norms, the total increase for the country as a whole is expected to be around Rs 4,35,000 crore a year - about 3% of GDP - a very heavy burden indeed.
This will set back the states for a few years and reduce money for the health and education of citizens. The poor will pay the most, suffering extended periods of inadequate government-driven facilities and capacity. As always, citizens will pay for this through their taxes, keeping 2.5 crore employees of the state and union government, including parastatals, in good stead. An equal number of pensioners, around 2.5 crore between the states and union government, will benefit.
Citizens are fully justified in asking the question as to how they would benefit due to this hike from their taxes. Will government services improve? Will we see a reduction in corruption? Will citizens be treated with respect when they visit government offices to get their work done? Will there be an increase in productivity? Will government employees attend to their needs promptly and answer their questions within set time periods? Will there be improved justice delivery and reduction in the time to rule on cases? Will judges cut their holidays and improve their throughput? Will the police treat citizens with respect and dignity? Will police on VVIP duties be reduced with an increase in the police force on regular duties? Will orderlies and personal staff be reduced for officers? Will the Ordnance Board and Armed Forces support staff increase their throughput and reduce numbers through attrition? Will there be an increase in work output and reduction in waste?
Sadly these are all futile expectations! The 6th pay commission made a series of recommendations to cut posts at the lower levels, increase productivity, retire incompetent and corrupt officials, and generally ensure that the hike was accompanied by measures to improve citizen services and government effectiveness. The government spoke vigorously about this, issued the massive hikes, and then promptly forgot these recommendations. There is a real danger again that the hike will lead to no tangible increase in productivity or effectiveness. True, PM Modi has sacked some corrupt incompetent officials and is demanding higher levels of performance. There are no reports of corruption in the higher echelons of government or the bureaucracy for the last two years which is a great achievement. But there has been no perceptible improvement in the general level of performance or reduced corruption at the middle to lower levels.
The time has come for a radical change in the way the government functions to justify the increased expense the tax payers pay for their compensation. Government posts at the lower level, mainly the support staff, need to be reduced with no new hiring. We need to remember that today a person hired at age 20 as a driver, a peon or class IV post, would mean a payment for at least 65 years as salary and pension, both on generous terms. We need automation and the utilization of technology to improve output. The income tax department processes 5.25 crore returns through the Tax Information network with not more than 500 employees due to automation - much of it outsourced at very low cost. But 40,000 tax officials remain to collect 8% of taxes with reduced work loads. In the armed forces, the system of orderlies, personal staff, and support staff needs to be reduced to allow more resources for weapons and technology upgradation. The railways need to automate much of their work, outsource more, and reduce costs. The central police services need to use technology to be more effective. In the airport, why are so many security people needed to stamp on luggage tags - this is a disgrace in the modern world. There is much waste and mismanaged utilisation of people in government services, leading to very low productivity. Tackling this is the need of the hour.
There is also a big issue of attitude which needs improvement. Government employees seem to have forgotten they exist to serve citizens and are paid out of the hard-earned money of citizens who do not enjoy security of tenure, good terms, pensions, health care coverage, and so on. Government hospitals in many places are a disgrace. Many government employees do not even put in the mandatory time everyday for work or complete work in time. They need to show respect to citizens who call on them, not waste their time by making them wait endlessly. The terms of engagement between citizens and government needs to change.
One hopes that PM Modi will look into these issues and transform the government into a more citizens-centric one to justify this increased costs so that citizens feel their money is well spent. He has set an example by his extremely hard work, drive, diligence, and frugality - this needs to become the norm.
(Mohandas Pai was the CFO and then the head of HR at Infosys. He is now Chairman, Aarin Capital Partners.)Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.Disclosure: Mohandas Pai is an investor in NDTV Convergence's e-commerce venture, smartcooky.com