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Updated: January 10, 2010 15:28 IST

Isaac keeps everyone guessing

Girish Menon
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Kerala Finance Minister T.M. Thomas Isaac. Photo: H. Vibhu
The Hindu Kerala Finance Minister T.M. Thomas Isaac. Photo: H. Vibhu

What will be the terms of reference of the proposed Ninth Pay Commission? Will the Commission’s terms be restricted to recommending revision of pay scales with its thrust on pay parity with Central scales? Should it be asked to review pay scales in the context of the transformation the State administration is witnessing, primarily driven by technology? Almost all service organisations are busy discussing the proposed commission’s terms of reference, but Finance Minister T.M. Thomas Isaac has kept them guessing about what he proposes to do.

The Ninth Pay Commission will have an envious task before it. It will have to make its recommendations keeping in view the overall fiscal impact its suggestions would have on State finances. Former pay commission members say a lot will depend on the political will of the State government to formulate the terms of reference.

The Finance Minister has already ruled out the question of enhancing the retirement age of employees. It is now almost certain that this might not be part of the terms of reference. In fact, he has chosen to ignore the current national debate on pension age owing to political imperatives.

The 13th Finance Commission, while processing its recommendations, had commissioned a working paper that suggested a higher retirement age, taking into account the huge outflow on pension payments. Since salary, pension and interest payments together would make up 90 per cent of the government’s expenditure, the working paper suggested rationalisation of pension schemes in the larger interest of maintaining fiscal discipline.

Pension payments

The Expenditure Review Committee, in its report tabled in the Assembly last year, had estimated pension payments to be 19 per cent of the total expenditure in 2007-08 (Rs.4,925 crore), a growth of 49 per cent as against 6.7 per cent in 2000. The committee suggested that the government should consider a higher retirement age and restructure pension schemes for government employees. It emphasised that the “Pay as You Go” (PAYG) scheme followed by Kerala would impose a higher fiscal risk.

The Finance Minister, while asserting that the retirement age will not be raised, has not revealed his mind on restructuring of the existing pension schemes. But experts associated with earlier pay commissions feel that he would have to address this issue.

Delivery mechanism

Former pay commission members are also of the view that the proposed panel should be asked to look into transforming State services into a modern and dynamic outfit. They feel the government should incorporate some of the terms of the Sixth Central Pay Commission in this regard. The Central Commission, for example, recommended several steps to improve delivery mechanisms of Government administration. In order to achieve this, the commission had recommended performance-related incentive scheme (PRIS). According to pay panel experts, there is hardly any penalty for inefficiency in Kerala service. A PRIS scheme would infuse efficiency in service delivery, they feel. But this would mean a review of the existing “bonus” payment methods, it is said.

The State government is now the process of implementing e-governance. The fundamental aspect of e-governance is efficient service delivery.

A committee to suggest business process re-engineering has been set up to overhaul the administrative structure that would leverage use of technology in administration.

Apart from simplifying administrative procedures, the exercise would also bring in major changes in the decision-making layers to ensure transparency and efficiency.

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