New Delhi: Finance ministry on Monday said the Seventh Pay
Commission will be mindful of the fiscal concerns of the government
while giving its report on new pay scales and remunerations for central
government employees and pensioners.
The Commission, headed by Justice A K Mathur, has been given time up to December 2015 to submit its report on revising emoluments of nearly 48 lakh central government employees and 55 lakh pensioners.
“We have communicated our concerns with regard to sustainability of public expenditure to Pay Commission. I am sure the members and chairman of the commission are aware of and will be sensitive to our concerns,” finance secretary Ratan Watal told reporters in New Delhi.
The Commission has time till December to submit its report, he said, adding thereafter it would be scrutinised by a secretariat to be set up in the finance ministry. Watal said although the recommendations would be implemented from 1 January, 2016, the burden on the exchequer would not be much in the current financial year.
However, he added, it would have implications in next fiscal. The Commission, headed by Justice A K Mathur, was appointed by the previous UPA government in February 2014 for 18 months. Its terms was extended in August 2015 by four months till 31 December, 2015.
The government constitutes the Pay Commission almost every 10 years to revise the pay scale of its employees and often these are adopted by states after some modifications.
As part of the exercise, the Commission holds discussions with various stakeholders, including organisations, federations, groups representing civil employees as well as Defence services.
The Commission, headed by Justice A K Mathur, has been given time up to December 2015 to submit its report on revising emoluments of nearly 48 lakh central government employees and 55 lakh pensioners.
“We have communicated our concerns with regard to sustainability of public expenditure to Pay Commission. I am sure the members and chairman of the commission are aware of and will be sensitive to our concerns,” finance secretary Ratan Watal told reporters in New Delhi.
The Commission has time till December to submit its report, he said, adding thereafter it would be scrutinised by a secretariat to be set up in the finance ministry. Watal said although the recommendations would be implemented from 1 January, 2016, the burden on the exchequer would not be much in the current financial year.
However, he added, it would have implications in next fiscal. The Commission, headed by Justice A K Mathur, was appointed by the previous UPA government in February 2014 for 18 months. Its terms was extended in August 2015 by four months till 31 December, 2015.
The government constitutes the Pay Commission almost every 10 years to revise the pay scale of its employees and often these are adopted by states after some modifications.
As part of the exercise, the Commission holds discussions with various stakeholders, including organisations, federations, groups representing civil employees as well as Defence services.
Government to take a fresh look at small savings interest.
KOLKATA | NEW DELHI: The government has
decided to review the small savings rates, which remain sticky at
8.4-8.5%, limiting banks' ability to lower deposit rates and slowing
down the transmission of Reserve Bank of India's softer monetary policy
decisions.
"It has been decided that with regard
to the transmission of the rates, the government will undertake a review
of the small savings rate also," economic affairs secretary Shaktikanta
Das said."Small savings is a decision the government has taken in
response to the policy rate announced by the RBI," he said.
The decision to cut small savings rates
is a tricky one since no ruling party wishes to become unpopular to the
vote bank they depend upon. However, lowering of the small savings
rates is directly linked to the rates at which companies borrow from
banks. "There is no time limit. We will do it in due course," finance
minister Arun Jaitley said. RBI governor Raghuram Rajan surprised all by
a 50 basis points repo rate reduction but doubts prevail on how banks
across the spectrum transmit the easy policy rate into lowering of
lending rates unless they manage to soften deposit rates. RBI has
reduced repo rates by 125 bps since January, yet the transmission of the
rate cuts into the real economy has been relatively weak.
Rajan indicated that there would be a
shift in focus from policy rates to greater transmission of these rates.
Banks reduced deposit rates aggressively over the last three quarters
with some lowering term deposit rates by 50-75 bps but matching cuts in
lending rates come with a lag. But they have time and again whined that
high interest rates on small savings such as public provident fund or
post office monthly income schemes are stopping them from lowering
deposit rates beyond a point and this inability prevents them from
making loans cheaper.
Senior citizens get 9.3% from post
offices, 100-130 bps higher than what they get from most state-run
banks. "A major part of small savings comes from the risk averse
segments and for them it is the means of subsistence. It (lowering small
savings rate) is easier said than done," said India Ratings managing
director Ananda Bhowmik. "So, the transmission of policy rate will
continue to be an issue. Historically, monetary transmission remains
limited to 25-40% of policy rate cuts. It may increase a bit but not
beyond 50% due to the structural bottlenecks," he said. The country's
largest bank, State Bank of India, cut deposit rates by 25 bps across
maturities effective from October 5.
Its medium-term deposit rate is 7.75%
at present while small savers enjoy 8.4% rate for deposits below five
years from post offices and for the popular monthly income scheme.
Public provident fund offers 8.7% rate a year.
Source : http://economictimes.indiatimes.com/
