Tuesday, 3 March 2015

Government getting ready for 7CPC report – First reaction through Budget Speech by FM

Government getting ready for 7CPC report – First reaction through Budget Speech by FM


But no signs of implementation from 1st January 2016 as no fund allocated for 7th CPC outgo in Budget 2015-16

Budget Speech of Finance Minister says “7th Pay Commission impact may have to be absorbed in 2016-17″.

Until now, Government did not consider the demands of Central Government Employees such as grant of interim relief, DA merger with pay etc.  However after Budget Speech employees have got a ray of hope as it is indicated that Govt has started finding funds to meet out the outgo on implementation of 7th Pay Commission in 2016-17.

The following is an extract of Budget Speech 2015-16 in which the need for funds for implementing 7th Pay Commission and its impact on GDP.

Budget  2015-2016

Speech  of Arun Jaitley Minister of Finance

February 28,  2015

Fiscal Roadmap

23. I want to underscore that my government still remains firm on achieving the medium term target of 3% of GDP.  But that journey has to take account of the need to increase public investment.  The total additional public investment over and above the RE is planned to be `1.25 lakh crore out of which `70,000 crore would be capital expenditure from budgetary outlays.  We also have to take into account the drastically reduced fiscal space; uncertainties that implementation of GST will create; and the likely burden from the report of the 7th Pay Commission.  Rushing into, or insisting on, a pre-set time-table for fiscal consolidation pro-cyclically would, in my opinion, not be pro-growth.  With the economy improving, the pressure for accelerated fiscal consolidation too has decreased.  In these circumstances, I will complete the journey to a fiscal deficit of 3% in 3 years, rather than the two years envisaged previously.  Thus, for the next three years, my targets are: 3.9%, for 2015-16; 3.5% for 2016-17; and, 3.0% for 2017-18.  The additional fiscal space will go towards funding infrastructure investment.
***
In document to study Medium Term Fiscal Policy Statement for further 3 years: Para 12:-
MEDIUM TERM FISCAL POLICY STATEMENT
12. However, it is pertinent to note that the resource base of the Centre will be constrained following the implementation of the FFC. With steep jump in the sharing pattern of tax revenues, the revenues of the States, which is surplus in most of the cases, will be further augmented on one side and the Centre will face resource crunch in one of the difficult phases of consolidation underway. While, therevenues are constrained in the FY 2015-16, it would continue over the medium term framework in FY 2016-17 and 2017-18.
Moreover, the 7th Pay Commission impact may have to be absorbed in 2016-17. The phase of consolidation, extended by one year, will be also be spanning out in the period. Thus, in the medium term framework the fiscal position will continue to be stressed. However, with necessary corrections on the Plan side under the new paradigm of Centre-State fiscal relationship and reforms on the subsidies, with better targeting and policy initiatives, it is expected that over the medium framework much of the fiscal correction would have taken shape, leaving room for building up better fiscal management thereupon. The change is monumental; and needs dextrous manoeuvrings in this initial phase.
(c) Pensions
42. The expenditure on pension payments of the Central Government includes both defence as well as civil pensions. Pension payment, in nominal terms was estimated at ` 74,076 crore in RE 2013-14 and at the year-end it was accounted at ` 74,896 crore. In BE 2014-15, pension payment in nominal terms was estimated at ` 81,983 crore. In RE 2014-15, it has been revised at ` 81,705 crore. The pension payment of Central Government for the past few years has been growing faster than the salary expenditure. The main reason for this is that there is an increase in number of pensioners due to higher retirements and increased life expectancy. In view of the likely impact of VII Pay Commission, Pension payment of the Government likely to be about 0.7 per cent of GDP in FY 2016-17 and FY 2017-18 respectively
**
In document to study Medium Term Fiscal Policy Statement for further 2 years:

FISCAL POLICY STRATEGY STATEMENT
Expenditure Management Commission:
37. While Government has managed to control the expenditure through rationalization in the fiscal consolidation phase, quality of expenditure remains an area that needs to be addressed. The ongoing fiscal consolidation has been successful in taming the fiscal deficit; however there is still imbalance in the public finance on the revenue side. As discussed in earlier section, concerted efforts are required to accomplish the target set for the revenue deficit and effective revenue deficit in the new FRBM regime. This entails structural changes in the Plan spending and definitive measures to contain Non-Plan spending within sustainable limits. Moreover, in the medium term, award of VII Pay Commission and XIV Finance Commission pose significant downside risk to Public Finance. Thus, time has come to look into the places where Government spends money and output achieved from it. Government will constitute an Expenditure Management Commission, which will look into various aspects of expenditure reforms to be undertaken by the Government.

MEDIUM TERM FISCAL POLICY STATEMENT
(c) Pensions

39. The expenditure on pension payments of the Central Government includes both defence as well as civil pensions. Pension payment, in nominal terms was estimated at ` 74,076 crore in RE 2013-14 and at the year end it was accounted at ` 74606 crore, marginally above the RE figure. In BE 2014-15, pension payment in nominal terms estimated at `81,983 crore. The pension payment of Central Government for the past few years has been growing faster than the salary expenditure. The main reason for this is that there is an increase in number of pensioners due to higher retirements and increased life expectancy. Accordingly, keeping past trend in view the Pension Expenditure of the Government has been projected to grow at 10.4 per cent in FY 2015-16. In view of the likely impact of VII Pay Commission, higher growth is assumed in FY 2016-17.
Source: India Budget

Railway Board Order: Advance reservation period increased from 60 days to 120 days w.e.f.1.4.2015

Railway Board Order: Advance reservation period increased from 60 days to 120 days w.e.f.1.4.2015


It has been decided to increase the advance reservation period from 60 days to 120 days (excluding the date of journey) w.e.f. 01.04.2015. CRIS will make necessary changes in the software for this purpose under intimation to all Zonal Railways as well as Board’s office.

There will be no change in case of certain day time Express Trains like Taj Express, Gomti Express, special trains, etc. where lower time limits for advance reservations are at present in force. There will also be no change in case of the limit of 360 days for foreign tourists.

Board desire that the above change may be given wide publicity well in advance of its implementation. Suitable instructions to all concerned may be issued to ensure smooth change-over to the new time limit.

Time limit for Advance Reservations in Railways has been increased from 60 to 120 days effective from 1.4.2015

Railway board issued orders on increasing the time limit for advance reservation in IRCTC has been enhanced from 1st April 2015

Source: 90paisa blog

Central Government staff demand early implementation of wage revision

Central Government staff demand early implementation of wage revision

Members of the Joint Council of Action South Zone which represents employees from the Railway, Defence, Postal and other Central Government departments organised a protest meeting near the Collectorate premises here on Monday.

More than 300 members of various associations, including Southern Railway Mazdoor Union (SRMU), All India Defence Employees’ Federation (AIDEF) and National Federation of Postal Employees (NFPE), participated in the protest meeting. Zonal president Raja Sridhar and divisional secretary J.M. Rafiq addressed the meeting.

The members also submitted a petition at the Collectorate along with a copy of the demands adopted by the National Convention of the Central Government Employees in December 2014.

In their 37-point charter of demands, the employees asked for the implementation of wage revision for Central government employees, which should be done once in every five years.

‘No privatisation’

They also demanded that no privatisation or Foreign Direct Investment should be allowed in railways and defence establishments, and opposed corporatisation of postal services.

Among other things, they also opposed outsourcing and privatisation of governmental functions and asked the government to withdraw the proposed move to close down printing presses.

Stating that many residential quarters needed renovation, the employees urged the Central government to carry out repairs, not to compel staff to stay in inhabitable quarters, and pay house rent allowance.

Source: thehindu

7th Pay Commission likely to submit report in October 2015

After 14th Finance Commission, 7th pay panel’s report looms

Finance ministry fears that its revenue will be affected in 2016-17 as it has to absorb new pay panel recommendations
New Delhi: After the recommendations of the Fourteenth Finance Commission (FFC) forced the government to reduce its plan expenditure in the 2015-16 budget, the Union finance ministry fears its revenues will remain constrained in 2016-17 as well since it has to absorb the recommendations of the Seventh Pay Commission (SPC) in that year.
The Seventh Pay Commission will submit its report by October 2015. 
 
 
“The 7th Pay Commission impact may have to be absorbed in 2016-17. The phase of consolidation, extended by one year, will also be spanning out in this period. Thus, in the medium-term framework, the fiscal position will continue to be stressed,” the finance ministry said in the macroeconomic framework statement laid before Parliament along with the budget on Saturday.
 
 
The government appointed the Seventh Pay Commission on 28 February 2014 under chairman justice Ashok Kumar Mathur with a timeline of 18 months to make its recommendations. Though the deadline for submitting the report ends in August this year, the Seventh Pay Commission is likely to seek extension till October.
 
 
The Sixth Pay Commission which was constituted in October 2006 had submitted its report in March 2008.
 
As a result of the recommendations of the Sixth Pay Commission, pay and allowances of the Union government employees more than doubled between 2007-08 and 2011-12—from Rs.74,647 crore to Rs.166,792 crore, according to the Fourteenth Finance Commission estimates.
 
 
“As a ratio of GDP, it jumped from a little over 0.9% in 2007-08 to 1.2% in 2008-09 and about 1.4% in 2009-10 on account of both pay revision and payment of arrears. However, it moderated to little over 1% in 2012-13,” the Finance Commission said.
 
 
The recommendations of the Sixth Pay Commission were implemented by states with a delay mainly between 2009-10 and 2011-12, with “significant expenditure outgo” in arrears on both pay and pension counts, the FFC said.
 
 
The FFC said that while the finance ministry projects an increase in pension payments by 8.7% in 2015-16, a 30% increase is expected in 2016-17 on account of the impact of the Seventh Pay Commission, followed by an annual growth rate of 8% in subsequent years.
 
 
However, it maintained that given the variations across states and the lack of knowledge about the probable design and quantum of award of the Seventh Pay Commission, it is neither feasible, nor practicable, to arrive at any reasonable forecast of the impact of the pay revision on the Union government or the states. “Further, any attempt to fix a number in this regard, within the ambit of our recommendations, carries the unavoidable risk of raising undue expectations,” added the Finance Commission.
 
 
A senior Pay Commission official, speaking under condition of anonymity, said its recommendations will surely have significant impact on the revenues of the central government. “The 14th Finance Commission was at a disadvantage since it did not have the benefit of the recommendations of the Pay Commission unlike its predecessors,” he added.
 
 
N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy, said the FFC has tried to factor in the impact of the recommendations of the SPC on the central government expenses. “The FFC report shows the capital outlay of the central government will dip in 2016-17 to 1.4% of GDP from 1.64% a year ago due to the implementation of the Pay Commission recommendation before it starts rising to 2.9% of GDP by 2019-20,” he added.
 
 
The FFC said that all states had asked it to provide a cushion for the pay revision likely during the award period. The FFC advocated for a consultative mechanism between the centre and states, through a forum such as the Inter-State Council, to evolve a national policy for salaries and emoluments.
 
 
The FFC also recommended that pay commissions be designated as Pay and Productivity Commissions, with a clear mandate to recommend measures to improve productivity of employees, in conjunction with pay revisions. “We recommend the linking of pay with productivity, with a simultaneous focus on technology, skills and incentives. We urge that, in future, additional remuneration be linked to increase in productivity,” it said.
 
 
The Pay Commission official quoted earlier said it has been mandated to recommend incentive schemes to reward excellence in productivity, performance and integrity, which it will do. “Though previous Pay Commissions have talked about linking pay with productivity, the earlier governments have not accepted such recommendations. Since this government has shown strong political will, we hope they will accept our recommendations,” he added.
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