The recommendations - which cover all new, existing and retired employees of the central government as also serving and superannuated members of the armed forces - have been made with effect from Jan 1, 2006.

The report of the Pay Commission, headed by Justice B.N. Srikrishna, was submitted to Finance Minister P. Chidambaram here and suggests higher pay to an estimated four million central government employees.

For the cabinet secretary, the top civilian official, the pay is now proposed at Rs.90,000 ($2,500) a month, a sharp rise from the present Rs.30,000.

For civilians, the commission has suggested a salary of Rs.6,600 at the entry level, compared with Rs.2,550 now. At the level of sectaries, the recommendation is for a fixed emolument of Rs.80,000, against Rs.26,000.

The panel has also suggested that while the house rent allowance for grade A cities like the four metros be retained, a higher allowanced of 20 percent be paid in grade A, B1 and B2 and 10 percent in grade C cities.

The defence personnel should be entitled to a military service pay of Rs.6,000 up to the rank of brigadiers, Rs.4,200 for nursing officers, Rs.1,000 for all personnel below the rank of officials.

In another bonanza for defence forces, the panel says encashment of leave must be de-linked from the number of years the person is in service, and be eligible for up to 300 days of such benefit at the time of retirement.

Officials in the rank of directors general in medical services should get a fixed pay of Rs.80,000, the pay panel has said.

"The report will be presented before the union cabinet for appropriate action," a finance ministry spokesperson said, after Chidambaram received the report. "We have also uploaded the report on the finance ministry web site."

The pay panel has also suggested that fixed allowances must be made inflation proof with provisions for automatic revision whenever the dearness allowance, payable on revised pay bands, goes up by 50 percent.

Importantly, the panel has said that its recommendations be implemented in full as anomalies and inconsistencies could crop up otherwise.

The other highlights of the panel's recommendations include:

- Reduction in total number grades to 20 from present 35

- A new medical insurance scheme for government employees

- Pension be paid at 50 percent of the average pay

- No linking of pension with 33 years of qualifying service

- Higher pension for those above 80 years of age

- Liberal severance package for those leaving service after 15-20 years

- System for market-driven compensation to young scientists

- Existing rates of most allowances be doubled

- Reimbursement of education allowance be raised from Rs.50 to Rs.1,000

- Hostel subsidy be raised from Rs.300 to Rs.3,000

- Risk allowance be replaced by risk insurance

- More pay to nurses, teachers, constabulary, postmen and forest guards

For the government, the recommendations come at a time when the finance ministry had announced a whopping Rs.600 billion ($15 billion) programme to waive loans taken by farmers.

"I have left headroom for myself," the finance minister said after presenting the budget Feb 29, when asked how he intended to finance the recommendations of the Pay Commission, which had been expected to suggest hefty salary hikes.

Chidambaram's reference was to keep the fiscal deficit low at 2.5 percent of India's gross domestic product so as to allow the government to borrow money to finance the pay hikes if required.

"If my additional revenues are buoyant that will pay for the increment, failing which I will fall back upon the headroom I have left for myself," the minister had said.

Comment