GD Topic - Has the Seventh Pay Commission met its objective?

Published by MBA Skool Team, Last Updated: February 19, 2016

6 people are having a discussion on the topic (Ramesh, Preeti, Rohit, Surjit and Divya)

Category: Social

Group Discussion Starts

Ramesh: Hello everyone, our topic for discussion today is whether the 7th pay commission has meet its objectives or not. As we all know, the constitution of the 7th pay commission was approved on the 25th of September 2013 by the then Prime Minister, Manmohan Singh. Along with this, a set of recommendations have been constituted which were effective from 1st of January 2016. The main objectives of the 7th pay commission are to review, examine, evolve and recommend changes to the principles which govern the pay, salaries and benefit structure of some categories of the central government employees. It also has a motive of improving the economic conditions of the country by increasing consumption.

Preeti: One of the bases for making the recommendations for the 7th pay commission is the economic conditions of the nation. Even though it may increase the salaries of many government employees, there is a huge public finance risk associated with it since this would eventually decrease the amount of money left to finance building capital assets and this will not go hand in hand with the motive that is incorporated in the 2016- 2017 Budget plan which is to increase the government spending on infrastructure investment. Hence this will cause a negative impact on the economy of the country.

Surjit: One of the recommendations for the 7th pay commission is to improve the National Pension System which has had many grievances reported over the last few years. I believe that this is going to do a lot to improve the welfare of the society.

Divya: I believe that even though the 7th pay commission will pose a huge risk in the finances of public, it will, at the same time be able to increase consumption among the publics because people will be having a higher pay wage as compared to what they had previously and this in turn will make them consume more. Higher consumption leads to an increase in the GDP and hence will lead to the overall growth in the economy.


Rohit: I have to disagree with Divya. According to me, I think that when a government’s approach to improve the GDP of the country is by increasing the consumption of the population, this approach should be focused on the entire population, and not just a narrow portion of the population. Another alternative that could have been taken by the government in order to encourage spending by the entire population is to cut off the less levied on the population. If the government will simply do away with the education less, the road less and the Swatch Bharat cess, this can do a lot to increase the consumption across the board.

Preeti: There are high chances that the fiscal deficits will increase in the coming months. Owing to the recent plunge in global oil prices, India is expected to import more oil from foreign countries like Africa oil where the prices are much lower. The imports of gold and steel by India are also expected to increase. This increase in imports will outweigh the increase in consumption which is expected due to the 7th Pay Commission thus making the fiscal deficit worse. Government can better use the money in some other ways which will more likely to influences the reduction in fiscal deficit of the nation.

Rohit: Also, as spoke about by some of the central government employees, it is observed the hike in their salaries where of negligible amounts since some of the allowances that they were given prior to implementation of the 7th pay commission have been cut off and the hiked salaries minus the allowances that are not given any more results to a salary amount which is close to the one provided prior to the 7th pay commission implementation.

Divya: The government, by awarding the seventh pay commission has an extra burden of Rs. 1.02 lakh crores. I believe that the higher economic growth in the coming financial year will reduce the impact cause by the seventh pay commission on the finances of the country. The economic growth in the coming financial year should help fund the extra burden of Rs 1.02 lakh crores.

Ramesh: As we are constrained by time, I think we should end this discussion here. As an end note I would like to add that the implementation of the 7th pay commission has added a lot of skepticism among the public as to whether it will actually improve the economic condition of the nation or not.


From the above discussion, it is evident that the 7th pay commission has been effective in some ways it has brought about a lot of skepticism in the minds of the people as to whether it is actually improving the economic conditions of the nation or not. On one hand, the pension system of the country as per the recommendations would likely benefit the employees who are pension seekers. Also, the consumption of a narrow section of the population is also likely to increase. On the other hand, some skeptics say that this approach to encourage an increase in consumption would be more effective if the entire population was involved and in order to involve the population a cut off on the less payment approach should have instead been adopted. There are also many concerns on the how impactful the seventh pay commission is on curbing the fiscal deficit of the nation as there is likely to be an increase in imports due to the recent plunge in global oil prices.

Facts from the topic

1 P Chidambaram on the 25th of September 2013 had announced that the constitution of the 7th Pay commission was approved by Prime Minister Manmohan Singh and that its recommendations would be effective from 1st January 2016.

2 Implementation of the 7th pay commission poses a public finance risk because the reduces the proportion of money which is to be spent on infrastructure investment

3 Budget Plan for the year 2016- 2017 includes a plan to increase the infrastructure investment spending by the government

4 The 7th pay commission aims to improve the GDP of the nation by increasing the consumption

5 It aims to revise the National Pension System which has had a no. of grievances of the past few years

6 The government can increase consumption of the entire population and not just a narrow portion of it by adopting other alternative approaches which includes doing away with fewer payments.

7 The 7th pay commission’s objective to increase consumption will not do so much to curb the fiscal deficit which is likely to increase in the coming months due to the plunge in global prices of oil.

8 Some government employees have reported that when calculated, the hike in salaries is negligible because some of the allowances which were given prior to the 7th pay commission have been cut off.

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