Pay Commission
Also called: Central Pay Commission · Topic: Government Budget, Fiscal Policy and FRBM · NCERT: Beyond NCERT
Meaning
A Pay Commission (also called the Central Pay Commission) is an expert body that the Union government sets up from time to time. It reviews the pay, allowances and pensions of central government employees and pensioners, and recommends changes. Its advice is not binding. The government decides how much of it to accept. A pay award matters for the budget because salaries and pensions are committed expenditure, meaning spending that is very hard to cut once it is promised. They are also revenue expenditure, which creates no asset. So a big pay award puts lasting pressure on the revenue deficit (revenue spending minus revenue receipts) and the fiscal deficit (the government's total borrowing need).
Example
After a Pay Commission award is accepted, the Centre's salary and pension bill goes up every year after that. With less money left over, the government may cut capital spending to stay on its deficit targets. A second effect: pay revisions raise the money salary of a clerk even though the clerk stays in the same post. If any income-based limit is not raised to match, such as the OBC creamy-layer ceiling, families can cross it on paper even though their real status has not changed.
Don't confuse with
- Finance Commission: a constitutional body under Article 280. It recommends how tax revenue is shared between the Centre and the states. It has nothing to do with employees' pay.
- State Pay Commission: each state sets up its own commission for its own employees. The Central Pay Commission covers only central government staff.