Latest 7th Pay Commission News – 75% of implemenation cost budgeted

Latest  7th Pay Commission News – 75% of implementation cost budgeted – Provision to be made for 7th Pay Commission Pay Arrears from January 2016

Latest 7th Pay Commission News - 75% of cost allottedPrime Minister Mr. Narendra Modi’s government has budgeted to meet nearly three-fourths of the estimated cost of the 7th Pay Commission report in 2016-17 with a provision of some Rs 53,500 crore, as it deferred the payment of extra allowances of about Rs 22,000 crore.

The budgetary outlay for salaries and pensions rose by Rs 59,000 crore or 21% to Rs 3.36 lakh crore in FY17, while the pay panel had pegged the annual hike in the outlay for pay, pension and allowances from the business-as-usual scenario at Rs 73,650 crore.

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While the outgo on the one rank, one pension (OROP) scheme is subsumed in the above budget outlay for FY17, the commission had estimated the overall increase in pay, allowance and pensions (PAP) over the usual scenario at 23.6%. Despite no provision for allowances, the extra PAP outlay made by finance minister Arun Jaitley for FY17 is tending closer to the additional expenditure estimated by the commission.

That’s because the Budget provided for around Rs 6,000 crore to meet some non-pay commission increments to the staff and certain non-salary revenue expenditure on the armed forces, sources said. For reasons of confidentiality, the defence salary bill is not explicitly stated by the government.

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The Budget addresses a 16% overall hike in the salary and pension of central government staff. However, the increase in pension outlay is a little more than what the commission proposed thanks to OROP for the armed forces. Separately, the cost of OROP was estimated at about Rs 10,000 crore for FY17.

Apart from the estimate for FY17, the Centre will also have to foot the arrears bill for the first three months (January-March) of the pay panel’s award period sooner or later.

Of the Rs 1.02 lakh crore additional expenditure needed to meet pay panel award in FY17, Rs 73,650 crore would be via the Union Budget and Rs 28,450 crore routed through the Railway Budget. The allocations for allowances, mostly house rent allowance, would depend on the report of a committee of secretaries which is going through the recommendations of the commission.

Source: Financial Express