Wednesday, 8 June 2011

No Pay Commission Arrear for Govt. employees ?

The windfall government employees receive by way of pay commission award arrears may no longer be forthcoming. The government is examining a proposal to implement pay commission awards prospectively on the lines of finance commission awards, as large arrears throw the finances of both the Centre and states in disarray.
"We are examining the suggestion," a finance ministry official told ET. He, however, added that the final call on the issue would be taken when the next pay commission is constituted. Pay commissions are usually set up at intervals of 10 years. The Sixth Pay Commission, the most recent, gave its recommendations in March 2008. It had proposed pay raises between 20% and 40% for government employees.

The finance ministry had told a parliamentary panel last week that the issue should be deliberated upon as retrospective implementation of pay commission awards has had adverse impact on the finances of the Centre as well as the states, a government official privy to the meeting said. Many state governments had expressed concerns over the issue of arrears. States set up pay commissions for their own employees after the pay commission for the central government employees submits its report.

"While many reforms can and should be contemplated to end this self-inflicted distortion, one action that could be taken immediately is that of making the pay award commence from the date on which the recommendations of future pay commissions are accepted by the government," the 13th Finance Commission had said in its report.

The burden of arrears on the central government from the Sixth Pay Commission award was Rs 28,160 crore on a salary base of Rs 44,360 crore. This was because the recommendations of the panel announced in 2008 were implemented retrospectively from January 1, 2006.

To save itself from a larger fiscal trouble, the Centre disbursed the arrears in two installments: 40% in 2008-09 and 60% in 2009-10. The arrears contributed significantly to the Centre overshooting its target in 2008-09, ending the year with a fiscal deficit of 6% of the gross domestic product (GDP) against the budgeted 2.5%. The fiscal deficit rose to 6.4% of GDP in 2009-10 as pay commission arrears pushed up the expenditure when the government was battling slowdown in revenues.

The Centre had to readjust its fissense but can work only if pay commission reports come well in time for implementation prospectively," said D K Srivastava, director, Madras School of Economics. Unlike the private sector, the government does not give annual salary hikes to its employees. Instead, it gives out dearness allowance twice a year to compensate for the rise in prices. The periodic pay commissions help adjust government salaries to market benchmarks. Most experts find the system flawed, as the performance benchmarks are not included in the salary revisions. The Sixth Pay Commission had recommended a performance related pay for government employees.

cal goal post for the subsequent years. It has budgeted a fiscal deficit of 4.6% of GDP for 2011-12, which is projected to drop to 3.5% in 2013-14. The finance commission had said if the Centre implemented pay awards prospectively, it would give state governments an opportunity to time their awards in a way that the need for arrears does not arise.

"If finance commissions are able to present their inter-governmental recommendations without any need for retrospective fiscal transactions, then the same should be possible in the case of pay commission as well," the commission had reasoned in its report.

Courtesy : Pay Commission

Related posts
4June, 2011-10June, 2011 Employment News Job Highlights
This week’s Employment News (Employment News 4th June, 2011 to 10th June, 2011) published a lot of job vacancies.  We just post the important Job highlights of the present issue of employment news for the convenience of our readers with … Continue reading ?

 
All India Consumer Price Index Numbers (AICPIN) for the Month of April, 2011 is 186
All India Consumer Price Index Number for Industrial Workers (CPI-IW) for the month of April, 2011 increased by 1 point from March, 2011 and reached at 186. This is based on the year 2001 is considered as 100 points. The … Continue reading ?

 
28May, 2011 – 3 June, 2011-Employment News Job Highlights
There is a lot of job vacancies are advertised in the present issue of Employment News (Employment News 28th May, 2011 to 3rd June, 2011). We wish to inform our readers the important highlights of the employment news this week. … Continue reading ?

 
No Income Tax Return for income below 5 Lakh from FY 2010-11
The Union Finance Minister Pranab Mukhejee said on Tuesday (24th May, 2011) that the salaried tax payers with an income less than Rs. 5 Lakh should not file Income Tax Return from the Assessment Year 2011-10 ( ie from the … Continue reading ?

 
Encashment of Leave to be granted to Government Servants on their appointment in Central Public Enterprises
Copy of Office Memorandum Subject : Encashment of Leave to be granted to Government Servants on their appointment in Central Public Enterprises The undersigned is directed to state that this Department has been receiving references from various Ministries/Departments seeking clarification … Continue reading ?

4 comments :

  1. [...] income is below 5 Lakh. The information is correct and the Union finance … Continue reading ? No Pay Commission Arrear for Govt. employees ? The windfall government employees receive by way of pay commission award arrears may no longer be [...]

    ReplyDelete
  2. [...] No Pay Commission Arrear for Govt. employees ? The windfall government employees receive by way of pay commission award arrears may no longer be forthcoming. The government is examining a proposal to implement pay commission awards prospectively on the lines of finance commission awards, as large arrears throw … Continue reading ? [...]

    ReplyDelete
  3. [...] income is below 5 Lakh. The information is correct and the Union finance …Continue reading ? No Pay Commission Arrear for Govt. employees ? The windfall government employees receive by way of pay commission award arrears may no longer be [...]

    ReplyDelete