Sixth pay commission report may vital for Government: S&P

Mon, 03 Mar 2008: 

The global credit rating agency Standards and Poor’s has stated in a statement that India’s currently credit rating may go downwards after coming of the sixth pay commission report. This statement had come on Feb 29, after presenting the budget.

India’s currently credit rating is 'BBB-/3' that reflects India’s strong economic prospects, solid external balance sheet, and deep capital market, that support a weak but improving fiscal position, as per S&P reports.

However, the Finance Ministry does not consent with this report. It believes that the new pay commission report will not put so much pressure to slow down the growth rate of the country.

To lead-up the general election next year, government has presented this populist budget like to waive off hefty farmer’s debt as presented as cited S&P, but the coming Pay commission report and this populist budget may slow down the Growth Domestic Product growth rate from current running 9.4% growth.

It is expected that the economic growth of India can be 8.2-8.7 pct in fiscal 2008-09 and 7.9-8.4 pct in fiscal 2009-10, reports S&P while ‘the general government deficit may be 6.7% of GDP in fiscal year 2007-08’.

On the other hand, Ministry believes that the impact of the coming Sixth Pay Commission’s recommendation is expected to be within 0.4% of GDP. The report of sixth pay commission is likely to be submitted on March 31, 2008 as Finance Minister announced on February 29 while presenting the budget.

According to Finance Secretary D Subbarao, “The fifth Pay Commission award of 1996 had translated into an impact of 0.4 per cent of GDP and I do not expect it to be higher than that level this time.”

‘As much as 20-25 percent salary can be hiked as the sixth pay commission suggests in its report’ as sources reports that will put additional pressure on the government. The recommendation of current fifth pay commission had put an extra burden of Rs. 8,800 per year on the government while the completely recommendation of sixth pay commission may put more than that burden over Central and state government in terms of paying salaries and pensions.

Only Railway Minister Lalu Prasad Yadav has asked from the Finance Ministry a heavy sum of Rs.5,000-crore to pay 14lakhs railway’s employee in the next fiscal, whereas there are more than 2crore government employees across the country including Central and State government’s employees.

The government had comprised the sixth pay commission in 2006 to study the current status of employees by viewing the increasing inflation. Usually after every 10-year period, the government has to organise the new pay commission to revise the salary structure of the government’s employees.

According to sources, these topics can be crucial considering points presented in the reports:

• Salary structure can be hiked about 20-25% from current status. • House Rent Allowance ratio can be surged in the A-1 and tier –II urban areas viewing the rocketing rentals. • The increment in the retirement age from 60 to 62 years may not be recommended • Suggestion of merging small allowances into one big allowance; at present it is 51% of basic salary in terms of several allowances. • Rectification in the pay of pensioners re-employed • To introduce the idea of recruiting highly specialised and skilful persons on the contract basis to get fresh ideas and new management skills

Now, the real suggestions of Sixth Pay Commission will unveil after commission submit its report. It is very much likely that government can accepts most of the suggestion presented by Pay Commission estimating the forthcoming Lok Sabha election and current buoyant economic infrastructure.

There are four members in the sixth pay commission:

1. Justice B.N.Srikrishna --- Chairman 2. Prof. Ravindra Dholakia --- Member 3. Mr. J.S.Mathur --- Member 4. Smt. Sushama Nath --- Member-Secretary