More cash in hand

PAY hikes bring cheers for some, heartburns for others. Social tensions and protests rise as inequalities increase. Comparisons become inevitable. IAS officers resent fat corporate salaries. Defence officers complain of discrimination and seek pay parity with bureaucrats. Reacting to the Central staff bonanza, farmers demand a debt waiver. A vast majority working in the unorganised sector has neither job security nor time-bound, inflation-linked wage increases. As more money chases fewer goods, prices would rise and the poor would feel the maximum pain.  

With tax hikes and oil gains the Centre can manage the higher pay burden but for states it would be ruinous. State politicians too have elections to win and they also pursue politics of appeasement. Punjab’s already overstretched finances could spell disaster since ruling politicians here are not known for paring wasteful expenditure, shedding administrative flab or using technology to cut costs. Chief Minister Badal would not sack the unwanted Chief Parliamentary Secretaries or shut unnecessary PSUs like the cow board but slash posts at the lower level and reduce the budgetary allocations to hospitals, schools, colleges and universities. Countrywide, money which should have been spent on education, health and infrastructure would go into unproductive spending. Babus’ pay hikes are resented because in their interaction with people, they appear uninterested and unexcited, if not unhelpful, extortionist and corrupt. Governments justify pay hikes, saying they need to attract and retain talent. For people what matters more is an efficient, hassle-free delivery of services. 

Pay hikes have a cascading effect. The cost of producing goods and offering services goes up. China once attracted massive foreign investment in its manufacturing sector because it was a low-cost economy. With regular wage increases it has lost that cutting edge and is forced to move to high-technology industries. India’s consumption-driven growth following the Western model needs a relook; otherwise it would extract a high price in terms of environmental damage and exploitation of natural resources. The pay-driven boost to car buying would soon demand wider roads, more flyovers and better traffic management. The Seventh Pay Commission report is actually for the benefit of car-makers, not the employees.