The first meeting of the committee appointed to look into the allowances recommended by the 7th Pay Commission is scheduled this week while the payment of arrears will commence from this month, Finance Secretary Ashok Lavasa has said.
"The decision to defer the decision pertaining to allowances and refer it to a committee was taken basically because there are 196 or so allowances, and the recommendations amount to major changes in the allowances," Lavasa said.
"So, the government decided that the committee of various officers should carefully examine and then give their decision. There are many ministries involved. Various categories of employees, various types of allowances," the Finance Secretary said.
"The Pay Commission had recommended that so many allowances should be abolished and that so many should be subsumed. The committee will have its first meeting this week. It will look into these considerations. The government has given four months," Lavasa told IANS in an interview.
"As regards the distribution of arrears, it will happen in August."
After the recommendations of the 7th Pay Commission were largely accepted by the Union cabinet in June, it was decided to constitute a panel headed by the Finance Secretary to specifically look at the suggestions on allowances.
The commission had examined a total of 196 existing allowances and, by way of rationalisation, it had recommended 51 allowances be abolished and 37 others be subsumed. Due to its wide impact, a panel was formed to take a holistic view on the changes proposed.
"The committee will complete its work in a time-bound manner and submit its reports within four months. Till a final decision is taken, all existing allowances will continue to be paid at the existing rates," a cabinet note had said.
Asked about the impact of Pay Commission recommendations on the budget and, more specifically, the fiscal deficit, the Finance Secretary said this was an exercise that will start soon.
"The Pay Commission report had been submitted before the budget. The budget did provide for some additionality," Lavasa said.
"As we go along at RE (revised estimate) stage, we will have to see what is the kind of impact it will have on the fiscal deficit keeping in view the revenue generation which is taking place. It is too early to say. We will review at that time," he added.
It was estimated by the Pay Commission that the additional financial impact on the exchequer due to the implementation of all its recommendations in 2016-17 will be Rs 102,100 crore. This apart, it had estimated an additional implication of Rs 12,133 crore on account of arrears.
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