7th Pay Commission: Cabinet to decide on allowances, says FM Jaitley

New Delhi: The Union Cabinet will take a decision on the suggestions of a special committee which has been set up to look into the provision of allowances under the 7th Central Pay Commission recommendations, Finance Minister Arun Jaitley said Tuesday.

Replying to a question on the pay commission in Rajya Sabha, the minister said the government has decided that the recommendations on allowances, other than dearness allowance, will be examined by a committee headed by Finance Secretary as Chairman and Secretaries of Home Affairs, Defence, Health and Family Welfare among others as its members.

The committee, which was constituted on July 22, has been asked to submit its report within four months. Its first meeting took place on August 4.

"As far as allowances are concerned, 51 have been abolished while 37 have been subsumed. As the measures are radical in nature, even the employees' unions have given their suggestions in the matter and therefore a special committee has been formed to look into it. Whatever the committee decides, it will go to the Cabinet," Jaitley said.

The matters relating to pay and pension as decided by the government have been implemented with effect from January one this year.

Replying to a related question, Jaitley said it was the responsibility of the state governments to pay the salaries of their employees from their internal resources.

"So they will have to manage it from their own resources," he said.

Digvijaya Singh (Congress) said the banking industry was in a crisis and lakhs and crores of rupes have gone into NPAs, willfull defaulters' list and restructured loans.

So in this changed scenario, was the government planning to amend the section 45(E) of RBI Act 1934 which prohibits disclosing credit information, he asked.

"Transparency is a very popular word and it is being accepted all over the world. With transparency and with the coming of RTI Act, even then in some matters it is balanced with commercial confidentiality..There are some laws which are there since long time like the Income Tax..

"Therefore, the governemnt will have to work under the framework of these laws. Currently, the government has no proposal to change this provision," Jaitley said.

As per 45(E) of RBI Act 1934, RBI is prohibited from disclosing credit information except under certain conditions.

Jaitley said the RBI gives detailed guidelines to banks on how to deal with the non-performing assets, stressed assets and how restructuring could be done.

To a question from KTS Tulsi, Jaitley said "trading and industrial advances" amount for larger NPAs in the country.

"As far as different sectors are concerned, there has been an experience that in case of smaller loans the level of NPAs have been much lesser. For example in the macro financing etc, the recoveries are to the extent of 99 per cent and therefore NPAs are much lesser. The higher NPAs are really in relation to much larger trading and industrial advances," he said.

As of March 31, the gross NPAs of public sector banks stood at Rs 4.76 lakh crore, Jaitley said.

On hearing this, Tulsi said "that's why farmers are killing themselves."

Jaitley said the "farmers were killing themselves because the prices are not remunerative, the cost of cultivation has gone up and they are not able to pay off debts. This is the principle reason why the farm sector was in distress".

Replying to a separate question, Jaitley said RBI had ordered an asset quality review of entire banking system which has been done on basis of which NPAs are now openly stated.

"And that is why in each quarterly asessment a provision is being made by classifying the NPAs as NPAs which was otherwise not being done. Therefore the accouts and balancesheets are now being cleaned up under the asset quality review which is being undertaken," he said.