Seventh pay commission allocated Rs 70,000 crore in Budget 2016

New Delhi: As much as Rs 70,000 crore has been provisioned in the Union Budget 2016-17 for implementation of Seventh Pay Commission for government employees, a top finance ministry official said.

While the Budget did not provide an explicit overall provision number, the government had said the 7th Pay Commission hike has been built in as interim allocation for different ministries and Budget numbers were credible.

Implementation of the pay commission report in toto is to cost the government Rs 1.02 lakh crore.

"We have provisioned for around 60-70 percent of the total burden that was talked about," the official said adding about Rs 70,000 crore has been provided in the Budget.

"We will wait to see the report of the Committee of Secretaries on the 7th Pay Commission and decide if we need further allocation," he said.

The Budget document states that "the implementation of the Seventh Pay Commission due from January 1, 2016 is to be implemented during 2016-17 fiscal as also the revised One Rank One Pension (OROP)scheme for Defence services."

The finance ministry has provisioned for this in the Demands for Grants for individual departments and ministries. It is built into and subsumed into those allocations.

"No one actually knows what will be the actual burden on the exchequer for the implementation of Pay commission recommendation. We have calculated internally and allocated to various ministries and departments accordingly," the official said.

The government in January set up a high-powered panel headed by Cabinet Secretary P K Sinha to process the recommendations of the 7th Pay Commission which will have bearing on the remuneration of 47 lakh central government employees and 52 lakh pensioners.

The Empowered Committee of Secretaries will function as a Screening Committee to process the recommendations with regard to all relevant factors of the Commission in an expeditious detailed and holistic fashion.

The official further said the finance ministry has fully provided for OROP scheme for defence personnel.

Faced with the burden of Pay Commission recommendations, there were concerns on whether the government would be able to stick to the fiscal deficit target of 3.9 percent for 2016-17.

However, in Budget Finance Minister Arun Jaitley dispelled doubts and promised to adhere to the fiscal consolidation roadmap and stick to 3.9 percent deficit target.