The NDA Government's implementation of Seventh Pay Commission scheduled to be on time may bring smile on the faces of all the Government employees, but the Government, it is learnt, will be in the soup due to the shortage of funds in its kitty. The Government will face big challenges in almost all departments - especially in Defence and Railways among others - if the much-expected Seventh Pay Commission (SPC) is implemented in the country.
"The SPC report would be submitted before the Government by August 2015 as per the deadline, but final approval looks doubtful due to lack of sufficient funds in the Government's kitty," a highly-placed Government sources told The Pioneer.
"I think almost all Government departments, mostly in Defence and Railways, will pose big challenges due to lack of funds for the Government. It is expected that the Government has to shell out huge funds for these two key divisions if the SPC is implemented for the sake of its employees in the country," he said.
Constituted in February 2014 under the chairmanship of retired Supreme Court judge Ashok Kumar Mathur, the SPC has an economist and two bureaucrats as its members. Earlier, the panel was expecting the SPC will submit its report by October 2015, but now the panel is on time. The panel took 18 months to complete and submit its report before the Government for final approval.
However, a senior Government official said on condition of anonymity that the SPC's recommendations would surely have significant impact on the revenues of the Central Government.
Elaborating the reasons how it would affect the Government revenues, he said, "If the SPC is implemented, the Government has face many revenue challenges ahead, mostly in Defence and Railways departments which are at present running short of funds in their respective departments."
"For instance, in Defence departments the Government's commitment on 'One Rank, One Pension' scheme will cost over Rs8,500 crore to benefit around 25 lakh ex-servicemen. And for Railways, there are also huge funds required for its infrastructure, safety and modernisation schemes throughout the country. So, where is the money for the SPC," asks the official.
Besides, it is learnt that the Government is keen to accept the recommendations of various incentive schemes to reward excellence in the employees' productivity, performance and integrity. If it is implemented, then the Government will have to spend a huge amount on this too.
"Though previous Pay Commissions have talked about linking pay with productivity, the UPA Government has not accepted such recommendations. Since this Government has shown strong political will to make its employees happy, we hope the NDA Government will accept our recommendations," the official said.
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 were more than doubled between 2007-08 and 2011-12 - from Rs74,647 crore to Rs166,792 crore.
During the Union Budget 2015, the Finance Ministry had said that the SPC impact might 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 had said.