Srikrishna to head Sixth Pay Panel

New Delhi: Justice B N Srikrishna will head the Sixth Pay Commission.

The terms of reference of the commission specify fiscal prudence and call for trimming government flab.

A Finance Ministry paper says that the panel’s recommendations should be such that the extra cost is 'contained' and that there is no 'unreasonable burden' on the exchequer.

It’s also banking on the reduction in staff strength to 32.74 lakh in 2005 from 37.77 lakh in 2000 to keep the wage bill unchanged.

Srikrishna, a retired Judge of the Supreme Court of India, had headed the Commission of Inquiry for the Bombay riots of 1992-93. The Commission had investigated causes and apportioned blame for the riots.

But the setting up of the pay commission is not without controversy.

Many economic experts had cautioned the Government against constituting the pay commission. Even the 12th Finance Commission and the Economic Survey for 2005-06 had warned against the revisions that are being undertaken regularly ever since the First Pay Commission was set up in 1956.

In its 2004 report, the World Bank held the Fifth Pay Commission as "the single, largest adverse shock to India's strained public finances."

However, official say that the pay scales of Government employees need to be revised with the rising cost of living.

It is also contended that the move would not hurt the country's finances because of the boom in the economy.

The Fifth Pay Commission was set up in 1994 and when it was implemented in 1997, it created an additional burden of Rs 17,000 crore per year on the government's finances.

Many state governments couldn't bear the burden of the hike at the time, forcing the central government to devise a financial bailout package for them.