Indicating good news soon for Union government employees, the Modi government said on Wednesday that the implementation of the Seventh Pay Commission award would result in a 15.79 per cent increase in the salary outgo for 2016-17.
The medium-term expenditure framework statement, tabled by Finance Minister Arun Jaitley in Parliament, said the salary expenditure would rise 9.56 per cent to Rs. 1,00,619 crore in the current financial year of 2015-16. The outgo would rise to Rs. 1,16,000 crore in 2016-17 and further to over Rs. 1,28,000 crore in 2017-18 with the implementation of the recommendations of the commission, the framework projected. The salary bill for the current year works out to 12.6 per cent of the tax receipts the Centre estimates it will collect during the year.
The commission was set up by the previous UPA government in February 2014 with the mandate to recommend revision of salaries of over 50 lakh Central government employees and remuneration of 30 lakh pensioners. It is expected to submit its recommendations — to be effective from January 2016 — by August-end. Mr. Jaitley said the impact of the commission award on the exchequer posed “a risk.” The statement projected that the pension bill would rise to Rs. 88,521 crore in the current fiscal, which is estimated to further increase to more than Rs. 1,02,000 crore in 2016-17 and over Rs. 1,12,000 crore in 2017-18. Mr. Jaitley expressed the commitment of the government to cut fiscal deficit and push subsidy reforms. “Macro-economic outcomes have improved significantly, primarily with the revival of economic growth and subsidence of inflationary tendencies,” he said.
The Centre is committed to bringing down the fiscal deficit to 3.5 per cent in 2016-17, and 3 per cent in 2017-18. For the current fiscal, it has been pegged at 3.9 per cent of the GDP. The fiscal consolidation strategy hinges on reclaiming high growth in gross tax revenues achieved in the past and gradually reducing expenditure on subsidy through reforms. This is essential for creating space for financing programmes of the government, he said.
