Nov 272015

Implementation Cell Set Up by Finance Ministry to Implement 7th CPC Recommendations

It seems like government is all set to implement the recommendations made by 7th Pay Commission. A Finance Ministry circular published today said that ministry has set up an “Implementation Cell” that’ll remain active for next one year starting from December 20, 2015 to process and implement the changes suggested by the commission.

The new cell established in Department of Expenditure will be headed by a Joint Secretary level officer and besides him there’ll also be nine other members in it, which will include a Director level officer and two Under Secretary level officers.

As you may know already, 7th CPC headed by Justice AK Mathur submitted its 900-page report of recommendations to the government on November 19. Now it’s just a matter of Finance Ministry’s approval to implement the changes suggested by the panel. The recommendations implemented by Finance Ministry will be effective from January 1, 2016.

The panel had suggested a 23.55% salary hike for Central Government employees with 14.27% hike in base remuneration and remaining in various allowances. In another recommendation it had also suggested implementing OROP for all civil servants. The minimum pay has been increased to Rs. 18,000, while maximum pay has also been raised to Rs. 2.5 lakh. The Secretaries will be paid Rs. 2.25 lakh per month. Currently remuneration in Central Government’s departments ranges from a minimum of Rs. 7,000 to a maximum pay of Rs. 90,000 per month, while Secrataries are paid Rs. 80,000 per month.

The recommendations suggested by panel will benefit 4.7 million employees and 5.2 million pensioners.

These changes are expected to increase the financial outgo of government to the tune of Rs. 1.02 lakh crore per annum and government has planned to arrange Rs. 73,650 crores out of this from general budget while remaining Rs. 28,450 crores will be borne by Railway budget. Due to this reason many financial analysts have suggested that CPC’s recommendations may strain government finances in the long run. However, government is confident that none of these changes will impact government’s 3.9% fiscal deficit target.

It’s worth remembering that government had introduced a “fiscal consolidation” roadmap in General Budget of this year in which it had stated that it plans to bring down India’s fiscal account deficit to 3.9% of GDP in financial year 2015 – 16, 3.5% in 2016 – 17 and 3% in 2017 – 18. Now if government fails in reaching these targets, it may obviously give the opposition an upper hand. Fiscal deficit of the country in financial year 2014 – 15 was 4% of GDP.

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