The Sixth Pay Commission may have recommended an average 40 per cent hike in the salaries of government employees, but the effective increase will be much less at 28 per cent, on account of the merger of the 50 per cent DA in basic pay way back in 2004. After submitting the report, Commission chairman Justice B N Srikrishna had said that the average increase in salaries would work out to 40 per cent over the Fifth Pay Commission award. The government had merged 50 per cent of the Dearness Allowance (DA) with the basic pay with effect from January 1, 2004.

This accordingly puts the basic pay at a much higher level than that provided in the Fifth Pay Commission and the effective increase over that level is 28 per cent, a top Commission official said. The government increases the DA of its employees every six months to compensate them for rising costs of living. Among other things, the Sixth Pay Commission has also suggested that the government should revise the base year of the Consumer Price Index (CPI) for computation of DA “as frequently as feasible”. It has further recommended that a separate CPI should be prepared by the National Statistical Commission for computation of DA for government employees.

The Sixth Pay Commission on Monday recommended an increase in salaries of over 4 million Central government employees, a move that would cost the exchequer Rs 12,561 crore in fiscal 2008-09. The Commission, headed by Justice B N Srikrishna, has recommended implementation of the revised pay from January 1, 2006, which would impose a one-time arrear payout burden of Rs 18,060 crore on the government.

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