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Will new pay panel proposals bankrupt India?

July 21, 2006 18:02 IST

India is setting up the Sixth Pay Commission to increase the salaries of central government employees, at an additional cost of Rs 20,000 crore per year.

While the move is being cheered by government staff, economists fear that it will impose an unbearable burden on India's public finances of up to Rs 60,000 crore per year as even the states will now have to hike employees' wages.

With the state governments yet to emerge from the shock of the previous pay commission recommendations, the new load could badly hit the country's growth plans. Some say it will derail the Indian economy.

Political observers say that the United Progressive Alliance government took the decision buckling under pressure from the Left parties and trade unions.

The World Bank in a 2004 report had criticised India's earlier pay panel and termed it as the single largest setback to India's public finances.

Do you think the new pay panel proposals will cripple India's economy? Are political compulsions overriding economic sense? Or do you think this is a fair move and salaries of government staff must be increased?

Tell us what do you think!