Pay commission recommends liberal hike and Cabinet approves farmers relief

Sixth pay panel recommends liberal pay hikes

The Sixth Pay Commission submitted its report to Finance Minister P. Chidambaram and asked for a substantial hike in salaries for central government employees across the board. The new pay scale will come into effect from January 1, 2006. The report will now be presented to the Union Cabinet for its consideration. The pay panel is set up once a decade to assess civil servant salaries. The pay hike will cost the Government a net Rs79.75bn (US$2bn) in the financial year ending March 31, 2009. Apart from this, the Government will have to make an additional, one-time payment of Rs180.6bn for salary arrears. The commission recommended a salary increase of 77% for the lowest rung of central government workers. It suggested minimum wage of Rs6,660 a month and maximum salary of Rs80,000 a month for government employees. The previous pay commission was set up in April 1994 and submitted its report in January 1997. The subsequent pay increase cost the Government Rs170bn (US$4.2bn) annually. States were forced to match the pay hike, swelling the combined central and state deficit to nearly 10% of GDP. Some economists fear a similar slippage in the fiscal deficit this time around.

Cabinet okays farmers debt relief fund

The Cabinet gave its approval for creation of a Farmers' Debt Relief Fund with an initial corpus of Rs100bn to be transferred from the Consolidated Fund of India to Public Accounts during the financial year 2007-08. The Cabinet gave its approval for augmentation of the fund required for reimbursing the lending institutions the amount of debt waiver /relief granted by them. Accordingly, the fund will subsequently be enhanced by Rs150bn in FY09, Rs150bn in FY10, Rs120bn in FY11 and Rs83.14bn in FY12. A scheme of debt waiver for farmers was announced in the Budget 2008-09. The scheme is aimed at mitigating the hardships being faced by the farmers in general and small and marginal farmers in particular. Upon being granted, debt waiver or signing an agreement for debt relief under the One Time Settlement (OTS), farmers would be entitled to fresh agricultural loans from banks in accordance with normal rules. The implementation of the debt waiver and debt relief scheme will be completed by June 30.