While answering to a question in Parliament on 12th August 2014 regarding the employees working in State Government, Ministry of State for Finance Smt.Nirmala Sitharaman said that the State Government employees are not covered within the terms of reference of the 7th central Pay Commission.
She replied in written form to a question asked by a member that service conditions of State Government employees fall within the exclusive domain of respective State Governments. Therefore, State Government employees are not covered within the terms of reference of the 7th central Pay Commission.
Thus, the recommendations of Commission will not directly apply to State Government employees. Accordingly, it is not possible for the Central Government to indicate the financial burden on State Governments, if they decide to adopt the recommendation of the 7th Central Pay Commission in respect of their employees with or without modification.
She also added, the Central Government had sought the views of the State Governments and till the date of the constitution of the 7th Central Pay Commission on 28.2.2014, only 14 States had responded. These State Governments generally mentioned, inter-alia, that adoption of the recommendations of a Central Pay Commission by them in case of State Government employees adds to substantial financial burden
Since the decision to adopt the recommendations of the 7th Central Pay Commission in case of the State Government employees will exclusively concern respective State Government, the question of any assistance by the Central Government will not arise. However, the Terms of Reference of the 7th Central Pay Commission provide, inter-alia, that while making its recommendations, the Commission will also keep in view the likely impact of the recommendations on the finances of the State Governments, which usually adopt the recommendations with some modifications.