Industry associations stated that the acceptance of proposals of the 6th Pay Commission would help in pulling as well as retaining the best talent in the government’s administrative machinery.

Moreover, it would lessen the degree of weariness in public sector departments and make government more reactive towards the public. At the same time, industry chambers fear that the move would worsen fiscal pressures.

The Union Cabinet on Aug 14 accepted the suggestions of the Sixth Central Pay Commission with some changes hinted by the Secretaries board.

With this, the pay of around 50 lakh government staff will climb up by at least 21%.

The revised pay scales will come into effect from January 1, 2006 and the revised rates of allowances from September 1 this year. The arrears will be paid in cash in two instalments – the first one of 40% during 2008-09 and the remaining during the next financial year.

After a Cabinet meet, Information and Broadcasting Minister Priyaranjan Dasmunsi told that the load during the recent fiscal (2008-09) because of the execution of the Srikrishna Commission recommendations would be approx Rs 15,700 crore on the Union budget and Rs 6,400 crore on the Railway budget.

The increase in wages would raise the financial implications for the Centre by Rs 17,798 crore per annum and the arrears, with effect from January 2006, would cost Rs 29,373 crore.

The minimum basic pay for an employee was raised to Rs 7,000 from Rs 6,660 suggested by the Commission.

As a result, the total monthly compensations of an employee at the lowest level would surpass Rs 10,000, including allowances.

The Cabinet decided to modify the fitment rate, which helps in arriving at higher allowances considering the merger of 50% of dearness allowance along with the basic pay, from 28% (as recommended by the Commission) to 40%.

The annual increment rate was increased from 2.5% to 3%.

At least three promotions have been guaranteed for all defence staff and civilian workers under the modified Assured Career Progression plan.

The Cabinet decided to double up the Military Service Pay (MSP) to Rs 2,000, while the senior officers would get an MSP of Rs 6,000 in addition to their salary.

Furthermore, middle-level officers including colonels and brigadiers have been located in the uppermost pay band and senior Lt. Generals, overlooked for promotion owing to lack of residual service, would obtain the grade of Army Commanders (Secretary grade).

As a replacement for the pay scale of Rs 24,050 – Rs 26,000, a separate pay scale was created for the Directors-General of Police, Principal Chief Conservators of Forest, General Managers (Railways), and members of the Boards of Income Tax, Customs and Central Excise, Postal and Ordnance Factories, among others, who were in this pre-revised scale.