The Associated Chamber of Commerce and Industry of India (ASSOCHAM) has called the government’s move to set up the seventh pay commission to look at increasing salaries of government employees ‘out of turn’.
It warned that such a move would lead to pressure on the state governments and the private sector to increase salaries, leading to further price increases.
“The private sector too will be compelled to hike salaries-leading to overall wage cost to the economy, which in any case is grappling with the slowdown. The move is out of turn at this point of time,” said D S Rawat, Secretary General ASSOCHAM.
The central government has about 80 lakh employees and ex-employees, and an estimated 2% of India’s population relies on central government salaries and pensions for their livelihood.
Pay commissions are set up once every ten years.
Assocham, which represents the interests of the corporate sector, said the pay hikes would lead to inflation, increase fiscal deficit and be a drain on the government’s already stretched resources.
“Since the recommendations of the 7th Pay Commission would be enforced from January 2016, it is just about two years from now that the government will have to bear a huge additional burden. At that point of time, the exchequer will be bearing the full load of the Food Act and the other welfare schemes like NREGA – whose cost is bound to increase. Is it necessary that the governments all the time have to keep fighting the fiscal deficit issue?” the industry lobby asked.