MEDIUM TERM EXPENDITURE FRAMEWORK STATEMENT OF FINANCE MINISTER ON 12-8-2015 AND THE REAL IMPACT ON PAY INCREASE

A Note by R.Elangovan, Working President, DREU

1.The medium term expenditure framework statement has not yet been up loaded in finance ministry’s website. However i have taken the figures provided by print media including the Hindu. As per their statement the expenditure on salaries will rise by 9.56% in the fiscal 2015-16 as a result of 7cpc implementation over the normal estimated expenditure in the 2015-16 budget to Rs 100619 crores. This means that the expenditure projected was Rs 91,839 cr which if increased by 9.56% becomes Rs 100619 crores.

2.While going through the earlier framework statements i have come to the conclusion that the ‘salaries’ shown is pay with normal increments plus DA projected.

3.As per the estimated strength and provision there of statement laid as part of finance budget ,the normal projection as pay was Rs 60731 cr and so DA is Rs 31,108 as deducted from Rs 91 839 cr. The budget document does not give the DA expenditure separately. It gives the total expenditure on all allowances. I have therefore arrived at the figure based on calculations .How ever i have sought the expenditure on DA, HRA, Transport Allowance separately through RTI.

4.The increase proposed is Rs 100619 crores from Rs 91,839 cr which means that there will be an increase of Rs 8780 cr. There won’t be any DA after 1-1-2016 up to 31-3-2016 in the fiscal 2015-16.Therefore the whole increase is on basic pay in this fiscal as.

5.As we have already seen that the basic pay is Rs 60731 the increase of Rs 8780 is over this 6o731.This increase is 14.45% only. The expenditure projected for 2016-17 is Rs 1,12,000 cr which is Rs 11,400 more over 2015-16 which works out to 11.32%.This is due to increment ,DA HRA, Transport Allowance etc..The projection for 2017-18 is 1, 16,000 cr.

6.IF 40% OF BASIC PAY IS TO BE GIVEN ,THE INCREASE OF EXPENDITURE IN THE FISCAL 2015-16 MUST BE Rs 24000 cr as against the Rs 8780 cr.

7. Pension expenditure for civilian pensioners was estimated to be Rs 27,145 cr and defence pension Rs 54,500 cr. The total is Rs 81645 cr. This is expected to go up to Rs 88521 cr, which is an increase of Rs 6876 cr .A s there will be no dearness relief for the fiscal 2015-16 the increase is to be accounted only to basic pension.

8.I have sought the expenditure break up for dearness relief under RTI. HOWEVER THE ROUGH CALCULATION SHOWS A NEAR INCREASE OF SAME 14.5% INCREASE IN PENSION

8. We must issue a warning to the government afresh demanding acceptance of our demand. I recall my earlier note where in i had quoted Bibek Debroy’s report that the 7 cpc will not be that destabilising as that of 6th cpc.

9 The impact of 6th cpc on expenditure as per estimated strength of establishment and provision thereof in respect of central government civilian employees was as follows:

Arrears Rs 26084 cr. For three years mostly on pay and DA regular pay increase per annum: Rs 8685 cr. These are actual figures .The 219% of RS 8685 cr is Rs 19000 cr. Even this is not given.