India Inc against 6th Pay Commission

New Delhi: India Inc has reacted strongly to reports that the Cabinet has given a go-ahead to the Sixth Pay Commission.

Industry chamber body PHDCCI, or Punjab-Haryana-Delhi Chambers of Commerce and Industry, was the first to react, saying the move threatens to slow down the economic growth as it will leave a huge burden on an already bleeding government exchequer.

"It will only lead to confiscatory taxation, which the PM has said he is against, and hikes in interest rates and a slowdown in growth," the industry body said.

Questioning the very rationale behind the constitution of a new Pay Commission, PHDCCI said the recommendations of a pay panel are always implemented partially. While recommendations on downsizing and wage increases linked to productivity are ignored, the increase in wages and salaries is alone implemented.

"This represents regressive transfers from the poor of the country. The poor pay through higher taxes for a salary budget that could have been spent on physical and social infrastructure.

Pay Commission recommendations on hikes benefit 4.2 million Central government employees and 20 million government employees when the recommendations eventually trickle down to states. But that is paid for by 380 million, who work outside the government," Bibek Debroy, Secretary General of PHDCCI, pointed out.

Though trade unions (backed by the Left parties) were demanding that the new recommendations be implemented with immediate effect, the Pay Commission, according to the private sector, will have a regressive effect on the economy.

A committee headed by the Cabinet Secretary had earlier argued against the Sixth Pay Commission, especially since after the implementation of the Fifth Pay Commission, the finances of the Central and state governments had been completely ravaged. Following the Fifth Pay Commission, the wage burden on the Centre went up by nearly 100 per cent and that of the states by 75 per cent.

The 12th Finance Commission and several states too had argued against the Sixth Pay Commission.

States said that the Centre should not announce the Pay Commission without consulting them first for their fiscal balance got upset.

Also once the impact on states and other quasi-government bodies is factored in, the Sixth Pay Commission will cost 1.5 per cent of GDP, something India cannot really afford.