Minister of State for Finance Jayant Sinha said on Monday that the government's fiscal position will not be impacted by the implementation of One Rank One Pension (OROP) and Seventh Pay Commission recommendations.
The implementation of OROP is expected to cost around Rs 8,000-10,000
crore for the government in the current fiscal while the
recommendations of the Seventh Pay Commission are expected to increase
the government's salary expenditure of over Rs 1 lakh crore projected
for this fiscal year.
"I think we are in a very good shape as far as fiscal management is
concerned. That was appreciated by all economists," PTI quoted Sinha, as
saying.
Sinha, who also attended a meeting of economists chaired by Finance
Minister Arun Jaitley at NITI Aayog, said that the government's fiscal
situation is robust enough to weather the impact from the implementation
of the OROP and the Pay Commission recommendations on salary hikes of
Central government employees.
However, analysts expect the implementation of OROP scheme for
ex-servicemen will cost the Modi government much more than the estimated
figure of about Rs 10,000 crore.
"We estimate the overall cost to be Rs 16,000 crore or 0.1 per cent
of GDP in FY16... The existing defense pension bill will go up by Rs
10,000 crore, while arrears totalling Rs 12,000 crore will be paid out
over two years," Pranjul Bhandari, chief India economist of HSBC Global
Research, had said last month.
Besides, the Seventh Pay Commission, headed by Justice AK Mathur, is
expected to recommend a 40% hike in salaries, according to an analyst at
global financial services firm Credit Suisse.
The Central government's salary bill is projected to rise by 9.56% to
Rs 1,00,619 crore in FY16 and the implementation of the 7th Pay
Commission recommendations is expected to lead to a further rise in
government expenditure.
Earlier this month, the Union finance ministry had said that the Pay
Commission would be aware of the government's fiscal issues while making
recommendations on salary hike to about 48 lakh Central government
employees and 55 lakh pensioners.
Source: ibtimes.co.in
