7th pay commission: Why govt is shying away from linking salary to performance

The union cabinet gave its assent to the 7th Central Pay Commission recommendations on Wednesday. Finance minister Arun Jaitley said he hoped “the payout, which will cost the exchequer Rs 1,02, 100 crore this fiscal and Rs 72,800 crore annually, will drive higher consumption, savings, tax revenue and economic growth.”

The finance minister’s hopes are corroborated by large sections of the industry. Consumer durable companies and real estate firms believe that higher disposable income will boost demand for discretionary and aspirational products.

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There are other cheerleaders as well who say that the pay commission award is a great mood elevator for the civil service officers who constitute the steel frame of the Indian administration. After all, the political executive depends on the civil service officials for actualising the larger national goals and dreams. These officials, in return for all the services they render, expect and deserve a fair deal.

What is a fair deal for the civil servants?

Many would consider the pay commission reward every ten years (some suggest it should be done every five years) is the least the government could do to make the work conditions hospitable for the best minds of the country that get selected through a rigorous national selection process.

But the question is: do the work culture and the institutional process actually encourage the best professionals to take responsibility for the key tasks? Are the best performers duly rewarded and laggards eased out? Unfortunately, our civil service system has created a level playing field for all (which is a negative, not positive, pointer in this case) where there is no link between pay and performance. The work horse as well as the work shirker, the outstanding performer as well as the dismal, run-of-the-mill officer – all are treated equally with regard to the pay, allowances and the perks.

An approach paper which was part of the Second Administrative Commission report had observed the following: “In any system the quality of public servants is critical in determining outcomes. We have well-established procedures for initial recruitment of civil servants in India. However, there is growing concern that our civil services and administration in general have become wooden, inflexible, self-perpetuating and inward-looking. While the bureaucracy responds to crisis situation with efficacy, colossal tardiness and failure to deal with ‘normal’ situations is evident in most cases… clear system of accountability at every level should be at the heart of our administrative reform.”

Although this approach paper is decades old, the malaise that it points out is still afflicting the Indian bureaucracy, perhaps with deeper implications. The successive pay commissions have tried to address these larger issues as well – the sixth pay commission while granting a whopping 40 per cent increase in salary, allowances and pensions had also made the right noises about the issues of downsizing (Grade A and Grade B officers are a mere 5 per cent of the civil service. Why should there be 95 per cent of Grade C and Grade D staff to service these 5 per cent top officers?). The commission made specific recommendations. But Manmohan Singh government just implemented the pay revision and ignored the accompanying suggestions for institutionalizing a robust civil service.

The 7th pay commission has also come up with certain concrete suggestions about performance-related-pay-schemes – to shift from ‘paying the position’ to ‘paying the person’. A civil servant would get a higher variable pay for outstanding performance and a negative variable pay for insipid performance. But clearly, that has not found favour with the current government. What are its implications?

Upendra Tripathi, a bureaucrat from the Karnataka cadre, was instrumental in turning around the loss-making Bangalore Metropolitan Transport Corporation (BMTC) and Karnataka State Transport Corporation (KSTC) and making them hugely profitable during his tenure at the helm; his effort was recognised and he was adjudged as the most outstanding civil servant by the government of India. But, the fact is, Tripathi draws the same salary as his predecessor who had left the BMTC and KSTC in deep red.

Does this situation provide for creating a performance-driven civil service?

Several commissions have made concrete suggestions to create an accountable and transparent civil service: the government has been called upon to enforce objective criteria and procedures for appointments and promotions, for ensuring definite tenure for civil servants holding senior positions (if the government wishes to curtail the tenure of a civil servant, it must record the reasons in writing). There are also suggestions for strictly enforcing the rules of business by recording reasoned orders in writing.

But clearly the successive governments have been uncomfortable in implementing these suggestions – as that would take away or curtail the discretionary power they enjoy in playing around with the rules to use the civil service to suit their political ends.The Narendra Modi government has given the green signal for only the pay hike and has kept the other suggestions of the 7th pay commission in the limbo.

The short message is this : When it gets down to brass tacks -- of looking at the larger national interest and acting accordingly -- the Congress and the BJP governments are just the flip side of the same coin.