Commissioned reform

Nobody seems to be particularly surprised that the sixth pay commission8217;s recommendations have been 8220;accepted8221; by the union cabinet. The finance minister, whose careful modifications aimed at managing the fiscal impact 8212; altering the award8217;s retrospective scope, and suggesting that some of it be forced saving 8212; were unfortunately rejected, has nevertheless insisted that it has all been budgeted for. Nor does it seem that observers of the Indian economy are massively re-working their estimates of the deficit this financial year. Clearly, sentiment across the board was that an upward revision of government salaries was expected, and overdue.

Many of the recommendations do not, in fact, go far enough. The pseudo-socialistic 8220;compression8221; of government salaries means that lower grades earn far more than their external options and higher grades still far less. The distortions thus introduced are major: they explain the fabulous amounts of rent-seeking activity and patronage at lower levels of the hierarchy, and the de-incentivisation of and brain drain from higher levels. However, that is not the main problem. What is considerably worse is that the government simply ignored one of the central suggestions of the commission 8212; that employees at the lowest level be moved to a higher grade if their educational qualifications permitted it, or retrained for that level if not, with their unspecialised work being performed subsequently by subcontractors. Some other attempts at rationalisation have also been passed over.

This is unacceptable; commissions do not make individual recommendations in isolation, but as part of an interconnected plan. It is reminiscent of the disaster following the fifth pay commission, when salaries were raised but the suggested retrenchments were not made, and the recommended reorganisation not implemented. This iteration produced not only its report but also commissioned studies: one mapping the way forward for performance-related incentives and another on managing pension and other 8220;terminal8221; costs. It is not too late for the government to demonstrate that it is serious about administrative reform by making it clear that these studies are going to be operationalised, and soon.