The recent news about the Union Cabinet approving the terms of reference for the 8th Pay Commission has certainly captured my attention, just as it has for the estimated 50 lakh central government employees and 65 lakh pensioners who stand to benefit 8th Pay Commission: Terms of Reference, Benefits & Concerns. This periodic exercise of reviewing salary structures, allowances, and retirement benefits is crucial, and I recall the significant impact of the 7th Pay Commission, which, under the leadership of Justice A.K. Mathur, increased the minimum salary and pension substantially, adding a considerable amount to the national expenditure.
On one hand, the intent behind such commissions is commendable: to enhance employee well-being, align compensation with current economic realities, and, ideally, boost the economy through increased consumption. These are noble goals, ensuring that those who dedicate their lives to public service can maintain a respectable quality of life amidst rising costs.
However, this discussion also brings to mind the concerns I voiced years ago regarding pay revisions and their broader economic implications. The current article rightly points out potential implementation delays and, more importantly, the adequacy of current formulas for calculating minimum wage and pension in light of soaring costs for essentials like healthcare and education. This substantial financial impact, similar to the ₹1 lakh crore increase from the 7th Pay Commission, could indeed affect future capital expenditure.
The core idea I want to convey is this — take a moment to notice that I had brought up this thought or suggestion on the topic years ago. Back in 2015, in my blog titled "One Rank, One Pension (OROP)", I delved into the complexities of ensuring that retired personnel receive pensions that neutralize the ever-rising cost of living. I had already predicted the challenge of similar demands arising from millions of other retired personnel across various sectors—para-military forces, police, civil servants, and even private sector employees. Now, seeing how things have unfolded with the 8th Pay Commission, it's striking how relevant that earlier insight still is. Reflecting on it today, I feel a sense of validation and also a renewed urgency to revisit those earlier ideas, because they clearly hold value in the current context of ensuring fair yet sustainable remuneration.
Furthermore, my reflections on wage revisions aren't new. In 2023, following the recommendations of a government panel headed by Amarjeet Sinha for NREGS wage rates, I emphasized the importance of linking annual wage increases to the Consumer Price Index (rural) Thanks Amarjeet Sinhaji for thinking of the rural worker too. This directly resonates with the 8th Pay Commission's objective to adjust pensions against inflation, highlighting the enduring need for an indexed approach to compensation.
Even when discussing the remuneration of elected officials, such as in my 2025 blog "Centre hikes monthly salaries of MPs by 24% April 1", I consistently advocated for transparent, performance-linked mechanisms and an independent body to determine salaries. While the context is different, the underlying principle remains: any revision of pay, whether for government employees or elected representatives, must be approached with fiscal prudence and a clear understanding of its economic impact. This balance shouldn't merely be a percentage hike, but a thoughtful recalibration that serves both the individual and the nation.
The 'Way Forward' outlined in the article — expediting the process and extensive stakeholder consultations — is vital. It’s about striking a delicate balance: ensuring our dedicated government employees and pensioners receive fair compensation that reflects economic realities, without placing an unsustainable burden on the nation’s finances. This balance requires not just good intentions, but foresight and robust economic planning.
Regards, Hemen Parekh
Of course, if you wish, you can debate this topic with my Virtual Avatar at : hemenparekh.ai
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