Railways Earning: Impact of implementing recommendations of the 7th Central Pay Commission

Railways Earning: Impact of implementing recommendations of the 7th Central Pay Commission

GOVERNMENT OF INDIA
MINISTRY OF RAILWAYS
LOK SABHA

UNSTARRED QUESTION NO: 88
ANSWERED ON: 16.11.2016

Proposal for bail out


PRATHAP SIMHA
Will the Minister of
RAILWAYS be pleased to state:-

(a) whether railways has initiated a proposal for the bail out to foot higher wage bill from the Finance Ministry, including waiver of dividend payment;

(b) whether Railways is 8-10% short of revenue target during the 1st quarter of the current financial year;

(c) whether Railways has also requested Finance Ministry to share the Service Tax collected from railway services, if so, whether Finance Ministry has acceded to proposal of Railways;

(d) whether Railways has also requested Ministry of Defence and Ministry of Social Justice and Empowerment to provide for the concessional tickets offered to defence personnel and Persons with Disabilities, if so, response of these Ministries to share the subsidy burden; and

(e) the measures being taken by the Ministry to implement 7th Pay Commission award?


ANSWER

MINISTER OF STATE IN THE MINISTRY OF RAILWAYS
(SHRI RAJEN GOHAIN)

(a) & (b): Impact of implementing recommendations of the 7th Central Pay Commission on pay and pension assessed to be around Rs.20,000 crore annually has been provided in the expenditure budgeted for 2016-17. However, in view of trend of shortfall in earnings in the current year which in the Ist quarter fell short of the proportionate target by Rs.6,755 crore (14.8%), some steps need to be taken to avoid eventuality of having inadequate resources to meet the expenditure. These may, besides increasing earnings & economy measures to curb expenditure; include deferring the payment of dividend, seeking help of the Ministry of Finance for reimbursing cost of social services obligation being borne by the Railway, etc.

(c) & (d): No request as such has been made to Ministry of Finance, Ministry of Defence & Ministry of Social Justice and Empowerment.

(e): The recommendations of the 7th Central Pay Commission as approved by Government have been implemented on Railways.

Source: http://164.100.47.190/loksabhaquestions/annex/10/AU88.pdf

Finance Minister Promises 'Minimum Pay' 7th Pay Commission Hikes

Finance Minister Promises 'Minimum Pay' 7th Pay Commission Hikes

New Delhi: Finance Minister Arun Jaitley has promised to consider to hike the minimum pay of central government employees beyond Rs 18,000, a day after the cabinet cleared 7th Pay Commission award for its employees.

Central government employees have been demanding hike in minimum pay since November 19, when 7th Pay Commission headed by Justice A K Mathur submitted its report to Jaitley.

The Finance Minister said he was not ‘rigid’ on the issue and the government will try to rectify some of employees’ demands including minimum pay.

Jaitley met with representatives of central government employees unions at Home Minister Rajnath Singh’s house for two hours till 11pm on Thursday night.

Jaitley, Rajnath Singh and Railways Minister Suresh Prabhu attended the meeting and assured unions leaders of central government employees that their demand would be looked into.

“The minimum pay of central government employees Rs 18,000 was made on recommendations of the 7th Pay Commission. But government will consider hiking it after discussions with all stakeholders,” he said in the meeting.

“Three ministers called us and we met them at Home Minister Rajnath Singh’s house late on Thursday for almost two hours. We have been assured that the minimum pay issue is going to be referred to one of two committees that the government is setting up to rectify any anomalies in the pay commission recommendation implementation,” Shiv Gopal Mishra, General Secretary of the National Joint Council Action (NJCA), a confederation of several central government employees’ unions, told reporters after the meeting.

The council claims a membership of 3.3 million, including the central government employees – Railways, Defence, Postal, Income Tax, Central Customs and Central Excise etc.

NJCA already have rejected Modi government’s overall 23.5 percent pay hike bonanza based on 7th Pay Commission recommendations and would go on indefinite strike from 6 am, 11 July.

They have been demanding Rs 26,000 as minimum pay instead of Rs 18,000 approved by the government based on the 7th Pay Commission’s recommendations.

Mishra also said the Home Minister assured them that “their interaction with us has the blessings of PM Narendra Modi”.

“On minimum pay, we are for a negotiated settlement and it seems there is some consideration at the highest level,” he added.

The increasing the minimum pay will change the salary fitment factor. If the minimum pay is hiked from Rs.18,000 to even Rs.20,000, the fitment factor will be higher than the 2.57 times approved by the government based on the pay commission recommendations.

If the 2.57 fitment formula is tinkered with, then salary and pension in general for all central government employees will go up.

NJCA wrote to all central government employees unions that “government has proposed to refer the issue of minimum pay and fitment factor to a committee for reconsideration. The NJCA will await communication in this regard from the government”.

It said that it will meet on 6 July again to decide on the proposed indefinite strike from July 11.

Source : tkbsen.in

On 7th Pay Commission implementation, private investment, Air India and more, here’s what govt is mulling over

On 7th Pay Commission implementation, private investment, Air India and more, here’s what govt is mulling over

Besides the government staff, economic analysts are keenly awaiting when and how the Centre will implement 7th Pay Commission award, which has implications for government finances (with estimated outgo of Rs 74,000 crore in FY16) as well as on inflation.

Also, with private investments yet to show decisive signs of picking up, the government has the difficult task of keeping the tempo in public spending, especially capital investments, at a time it is losing the benefits of low crude oil prices.

Finance secretary Ashok Lavasa speaks on these issues in an interview to FE’s Prasanta Sahu. Excerpts.

GDP growth in FY16 was put by the Central Statistics Office at 7.6%, with the growth in the last quarter coming in at 7.9%. Private consumption has been the growth driver. Despite the efforts by the government, private investors are yet to shed their diffidence. Among infrastructure sectors, highways, railways etc. have seen a turnaround but mainly because of government investment. How far is this model sustainable given the Centre’s (limited) fiscal capacity?
Many infrastructure projects, in which private sector has been involved, have started moving. In highway sector, for example, the hybrid annuity model has started attracting investors. As we go forward, we feel that the initiatives that have been taken by the government – to improve the ease of doing business and integrate various clearances – would give a push to private-sector investments. In infrastructure sectors, where the government plays a key role in awarding contracts etc, we are seeing positive results too. If all the factors are favourable, the GDP growth could be close to 8% this year.

The questions about GDP data refuse to wither away. Manufacturing GDP growth and the IIP (industrial production) data aren’t quite compatible, even if one considers the fact that apart from output, value addition is now being captured more efficiently.

The Q4 results of some of the major companies show that their EBITDA has increased. The variation between manufacturing growth (9.3% in FY16) and IIP (2.4%) was mainly due to the fact that some sectors did well while some did not.

How important are lower interest rates in reviving demand?
I think it’s a question of giving a boost to demand. Sometimes people may have more expectation than what RBI could do (in terms of lowering rates). The RBI has had to consider various factors and take a considered view. It is not possible to please all people all times. It is fair to expect that whatever lowering (of rates) has been done by RBI, finds an expression in the retail lending rates. I think the governor is right in saying full transmission has not happened of the central bank’s (cumulative 150 bps) rate cut since January 2015.

What will be the guiding framework of the “prospective planning” that will replace five-year Plan?
We could divide it into three parts: the period till which one can have some predictability on availability of resources, that will be, say, a three-year action plan. Beyond this, there will be medium-term (seven-year) Plan. Besides, there can be a prospective plan for theb period till 2030. In the prospective plan, what you already have is sustainable development goals, which are part of the international commitments. Niti Aayog will look at integration of issues and prospective planning while department of expenditure will make the fund allocations for various programmes.

Will substantial additional provision be needed to meet the Pay Panel-related outgo in FY17?
It will be too early and premature to say whether budgetary provision is not adequate or not. No one knows to what extent the government will accept the Pay Commission’s report. But, there is a provision in the budget to take care of the impact of the pay commission award (According to sources, FY17 budget has provision of about Rs 54,000 crore for honouring the pay panel’s award, but Lavasa refused to comment on this ).

Will Niti Aayog’s reported suggestions on strategic disinvestments in a clutch of PSUs including Air India be taken forward this year?
We haven’t so far received the recommendations you are referring to. We have to explore all forms of divestment and strategic sale is of course one of them. The Department of Investment and Public Asset Management will be looking at all possibilities and deciding on which unit to be put on privatisation or disinvestment or strategic sale mode.

Is there any move to monetise surplus land with defence, railways and ports bodies?
This is not to be done as a central government policy. The railways have been trying to monetise land. Certainly, this is one source of revenue, but it may be not a very significant source. Whenever an entity decides to take up any piece of land for monetisation, it has to consider all the legal issues, physical condition, its own plans of utilising and ultimately, if there is a market for that (in case of sale/leasing out).

Source: FE

7th Pay Commission review panel held on Saturday, regarding pay hike to be implemented by August

7th Pay Commission review panel held on Saturday, regarding pay hike to be implemented by August

The Empowered Committee of Secretaries, who is processing the recommendations of the 7th Pay Commission met Saturday to discuss the issue of pay hike of central government employees and pensioners.

Sources told that Empowered Committee agreed to implement to hike pay to 48 lakh of central government employees and and 52 lakh pensioners from August 1, However, the source declined to reveal details of the meeting.

The final decision on the matter has been taken in the meeting of the 7th Pay Commission review committe chaired by Cabinet Secretary P K Sinha in New Delhi on Saturday.

The meeting’s agenda also included adding final touches to the recommendations before they are handed to the Finance Minister Arun Jaitley.

7th Pay Commission award comes into effect with retrospective effect from January 1, 2016, salary packages of central government employees and pensioners will be impacted.

The Empowered Committee of Secretaries proposed to credit the arrears along with the revised pay.
The Secretaries’ group has recommended proposed a minimum salary at Rs 21,000 and the highest salary at Rs 2,70,000 for hiking salary around 30 per cent also recommended for doubling of existing rates of allowances and advances.

The 7th Pay Commission by headed Justice A K Mathur had recommended the minimum salary for central government employees at Rs 18,000 and maximum salary at Rs 2,50,000.

TST

FinMin to seek cabinet nod for 7th pay commission award by June-end

FinMin to seek cabinet nod for 7th pay commission award by June-end

The finance ministry may seek Cabinet nod by June end to implement 7th Pay Commission award, The Sen Times learns from sources. It is more or less confirmed that a Cabinet nod will be required to help central government employees to neutralise the impact of inflation. The government intends to approve 30 per cent salaries hike of central government employees.

The Secretaries group has reached the conclusion to propose 30 percent basic pay raise instead of 14.27 per cen, which recommended was recommended by 7th Pay Commission but Finance Minister Arun Jaitley has yet to see the workout of secretaries group, sources said.

The Secretaries group has to share the information with the Finance Minister to get his approval. Following the clearance from the Finance Minister the 7th pay commission award would be got cabinet nod.

Earlier, the Secretaries group sought suggestions from all the stakeholders for drafting of their report on the 7th Pay Commission recommendations to address the concerns of central government employees in an effective manner.

It used to be just a customary affair, sources said.

Pay Commission award usually happens every 10 years in line with central government employees’ pay hike.
The 7th pay commission was set up by the UPA government in February 2014 to revise remuneration of about 48 lakh central government employees and 52 lakh pensioners.

The Commission headed by Justice A K Mathur proposed the highest salary at Rs 250,000 and the lowest at Rs 18,000. The commission also recommended 14.27 per cent increase in basic pay, 23.55% overall increase in salary, allowances and pensions. The increase in allowances was recommended 63% while pension was proposed to rise 24%.

Apart from this, the Commission also recommended for abolition of allowances and advances like risk allowance, small family allowance, festival advance, motor cycle advance.

A 13 members secretary-level Empowered Committee or Secretaries group, led by cabinet Secretary P K Sinha was formed in January to review the recommendations of 7th Pay Commission before cabinet nod.
The Secretaries group is likely to purpose 30 percent basic pay hike of central government employees and it’s also advocating for doubling of existing rates of such allowances and advances, which has been recommended for abolition by the 7th Pay Commission.

The finance ministry sources said the pay hike is likely to be assumed greater importance since responsibility of central government employees have increased since the getting power of Prime Minister Narendra Modi.

Government likely to implement 7th Pay Commission award around September-October

Government likely to implement 7th Pay Commission award around September-October

New Delhi: The Central government employees will have to wait till September-October to get higher salaries under the 7th Pay Commission.

As per a Financial Express report, government is expecting that higher salaries released around the festival period starting with Durga Puja and Diwali will boost consumption, which will have a multiplier effect on the economy.

Though the employees will get arrears with retrospective effect from January 1, no retrospective arrears in allowances will be given. With the move, the exchequer would be able to save around Rs 11,000 crore.

The commission had estimated the additional outgo in FY17 due to its award at R73,650 crore.

Source: zeenews.india.com

7th Pay Commission award to stoke inflation, push up GDP: RBI report

7th Pay Commission award will put an upward pressure of 1-1.5 per cent on inflation, but is expected to boost GDP by around 40 bps during the current fiscal, RBI said in a report today.

At the same time, the central bank remained confident of meeting its March 2017 retail inflation target of 5 per cent.

“Assuming that the government implements the 7th Pay commission recommendations by the second quarter of 2016-17, CPI inflation could be, on average, 100-150 bps higher than the baseline in 2016-17. Its impact is expected to persist up to 24 months,” Governor Raghuram Rajan said in the a report released along with the monetary policy document.

The report, however, noted that the 7th Pay Commission award will boost GDP by around 40 bps during the current fiscal.

The 7th Pay Commission award impact will also jack up food prices, the report said, adding that “food prices could consequently increase, leading to inflation rising above the baseline by 80-100 bps in 2016-17, even assuming effective government policies relating to food stocks, procurement and minimum support prices”.

On achieving the inflation target (6 per cent in January this year), the Governor said inflation has evolved along the projected trajectory and the January 2016 target was met with a marginal undershoot.
“Going forward, CPI inflation is expected to decelerate modestly and remain around 5 per cent in FY17 with small inter-quarter variations,” he said, but warned that there are uncertainties surrounding this inflation path emanating from recent unseasonal rains, the likely spatial and temporal distribution of monsoons, the low reservoir levels by historical averages, and the strength of the recent upturn in commodity prices, especially oil.

Persistence of inflation in certain services warrants watching, mainly due to 7th Pay Commission award, he said, while there will be some offsetting downside pressures stemming from tepid demand in the global economy. But the government’s effective supply-side measures keeping a check on food prices, and “the government’s commendable commitment to fiscal consolidation” will have a salutary impact on inflation.
On growth, which it has retained at 7.6 percent for this fiscal, the report said, “The uneven recovery in growth in FY16 is likely to strengthen gradually in FY17, assuming normal monsoons, the likely boost to consumption demand from the implementation of the pay commission and OROP, and continuing monetary policy accommodation.”

The gross value add growth projection for 2016-17 is retained at 7.6 per cent, “with risks evenly balanced”.

PTI