Faced with virtual defiance from the three service chiefs on the issue of the "discriminatory" pay scales recommended by the 6th Pay Commission, the government on Sunday set up a high-level ministerial committee to address the grievances of the armed forces.

External Affairs Minister Pranab Mukherjee will head the three-member committee, which includes Defence Minister AK Antony and Finance Minister P Chidambaram that will go into the concerns of the armed forces that the pay commission has put them at a disadvantage vis-a-vis civilian bureaucracy.

• All about the 6th Pay Commission

Army Chief Gen Deepak Kapoor, Navy Chief Admiral Sureesh Mehta and Air Chief Marshal Fali Homi Major - who together command 1.5 million defence personnel - had come together on the issue and decided not to implement the revised pay scales from October 1 as was being done in the case of other 3.5 million central government employees.

However, the services have decided to accept the revised pay scales for the moment and submit their salary bills to the defence ministry on Monday.

The three-member committee was set up following a direction from Prime Minister Manmohan Singh, who is currently abroad.

In Thiruvananthapuram, Defence Minister AK Antony said the grievances of the defence personnel would be addressed soon and they would be "getting their pay in new scales by Diwali."

"We are taking up the issue seriously. We hope we will be able to find a solution to the issue. All of them will be getting their pay in new scales by Diwali," Antony told a press meet.

The finance ministry will have to now prepare itself for a hugely-bloated demand from the defence services in the Budget under the salaries and pension head. In the 2008-09 Budget, defence pensions amounted to Rs 15,500 crore (Rs 155 billion) and salaries added to upwards of Rs 55,000 crore (Rs 550 billion). As part of the arrears also payable this year, according to a clarification from the finance ministry, the size of the defence budget is likely to go up by at least 20 per cent next year.

The armed forces have been demanding that the government restore 70 per cent "extant pensionary weightage" to jawans by deferring the recommended 50 per cent weightage on the last salary drawn by them before retirement. This has been accepted in principle.

They also want the government to place lieutenant colonels and their equivalents in the Navy and the Air Force in Pay Band-4 (Rs 37,400-67,000), a privilege extended to their civilian counterparts, instead of Pay Band-3 (15,600-39,100). They also want the government to restore the grade pay parity between the middle-rung defence officers (from Captain to Brigadier) with their civilian and paramilitary counterparts.

The last "anomaly", the defence forces point out, is the creation of a new Higher Administrative Grade Plus pay scale in which civilian and police director generals have been placed.

The services want the government to accord the "Plus" status to their lieutenant generals too, who have been placed in a lower Higher Administrative Grade.