Reacting to news that the government may look to soften the financial
impact of the recommendations of the 7th Pay Commission by pushing out
some payments into future fiscal years, the panel’s chairman Justice
Ashok Kumar Mathur said he wouldn’t be surprised with such a move and
added that the practice existed even during implementation of previous
pay commissions’ reports.
It is widely reported that the government may not implement all the
recommendations of the Commission and that some payouts, such as house
rent allowance, may pushed out beyond fiscal year 2017.
In an exclusive interview, Justice Mathur admitted that the cost of
panel’s recommendations may exceed the forecast of about Rs 74,000 crore
for the Union Budget and Rs 28,000 crore for the Railway Budget, and
added that payments of allowance could result in higher payouts.
“But I am happy that the government may be intending to release salary
and pension payments immediately [as per sources quoted by the CNBC-TV18
report],” he said, adding that he had had no communication with the
government post submission of his report.
The Pay Commission, which issues recommendations for a payments hike for
government employees once every 10 years, has in its 7th report sought a
16 percent hike pay, 138.71 percent hike in house rent allowance and a
26.63 percent hike in pension, resulting in an overall hike of 23.55
percent.
Sources say the government is looking to absorb payment hikes to the
tune of Rs 50,000-60,000 crore next fiscal, when the commission’s report
will have to be implemented, out of the Rs 74,000 crore projected by
the panel.
Below is the transcript of AK Mathur’s interview with Shereen Bhan on CNBC-TV18.
Question – Let me start by asking you for your first comment on what we
are picking up from sources within the government at this point in time.
What top government officials seem to be suggesting to us is that
payment for allowances may perhaps be staggered and at this point in
time, the Pay Commission recommendations and the payout will be confined
to the salary and the pension component and also suggesting that some
of the perks of the Seventh Pay Commission as recommended are notional
and may not be accepted by the government. How would you respond to this
information?
Answer – I have no idea what recommendation they are going to respond
and what not they are going to respond, but I am very happy if that is
the attitude of the government, that they will immediately release the
salary and the pension part, because about 46 lakh people will be
benefitted by the pay hike and similarly the greater pay hike will be to
the pensioners.
That constitutes almost 52 lakh people. So, I am very happy that they
have decided to release that immediately. And they can consider of
releasing the allowances after sometime looking to their financial
position.
However, we have tried to make it that the recommendation should be well
within the kitty of the government. But still we do not know how much
of the actual burden will be on the exchequer. Only our rough estimate
is about Rs 1,02,000 crore. But perhaps, on the calculation of the
allowances, it might exceed a bit also.
Question – So, you are saying that on the basis of the allowance
component, it may exceed the estimation and perhaps, the government then
given the fiscal pressures at this point in time is well within its
right to stagger the payment of the allowances. What has been the past
precedent?
Answer – Past precedent has been government always delayed the payment
of the allowances, payment of the recommendations in total. And the
government do certain modifications, one way or the other and it depends
upon the government that if their finances are well within the reach,
then they can release forthwith or they can defer it for sometime also.
In the past also, the reports were always belated and sometimes, in the
last Sixth Pay Commission, it took two years to implement them. But I am
happy that they are going to implement the present Pay Commission’s
recommendation which is given to them well within the time.
Government has sufficient time to react, they have to bring this Pay
Commission’s recommendation with effect from January 1, 2016. We had
given them a report in the early November. So, government has sufficient
time to react on that.
Question – When you made that estimate of Rs 74,000 crore, that was the
budgetary spend that you factored in as part of the Pay Commission, did
you factor in the allowances as well?
Answer – We did of course, that is why we roughly estimate it to be Rs
1,02,000 crore. But actually, the allowance part is such a tricky thing
that it depends upon your basic pay.
And sometimes, someone has some basic pay another fellow has some other
basic pay. So, exactly, working out is very difficult. So, on an
average, we have taken it that it should cost the government to the
extent of Rs 1,02,000 crore but, it may exceed the calculation, go a bit
deeper.
Source: Money Control
