8th pay commission has its task cut out

Over the decades, especially since the mid-1990s, the pay increase in real terms for government staff has been much higher than that of per capita net national income. Though this might have been needed to adequately compensate them and provide incentive for performance, the burden on the exchequer has risen, with “salaries and pensions” now accounting for 18% of the Centre’s revenue expenditure.

Rising pension burden

With the increased life span, the Centre’s pension expenses have marginally surpassed that on salaries. With the market-linked National Pension System yielding its fiscal dividends, the expenses on government staff compensation might peak by 2040s. A control being exercised on new government employees would also help.

8 th Pay Commission faces tough balancing act

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