7th Pay Commission Pay hike needed more money: FM

7th Pay Commission Pay hike needed more money: FM

New Delhi: Finance Minister Arun Jaitley told lawmakers on Friday that he would need more money in the current fiscal year to cover the cost of 7th Pay Commission Pay hike for 10 million central government employees and pensioners.

The government will require “some enhancement” for spending on salaries and pensions in 2016-17 to absorb the off-cycle pay hikes announced in June on the recommendation of the 7th Pay Commission.

The government faces a challenge to achieve its fiscal deficit target of 3.5 percent of GDP in the current fiscal year, but is “quite optimistic” of fully achieving the target of 3 percent in 2017/18, the finance ministry said in the Medium-Term Expenditure report tabled in parliament’s lower house.

Rating agencies such as Moody’s have said that the increase in wages would boost consumer demand, leading to inflationary pressures and making it difficult for the next governor of the Reserve Bank of India to achieve its inflation target.

Prime Minister Narendra Modi’s government has just confirmed a central inflation target of 4 percent, plus or minus 2 percentage points, that was agreed with departing governor Raghuram Rajan for the next five years.

Total federal spending on salaries and pensions is estimated to rise about 10 percent in the next fiscal year to 2.58 trillion rupees ($38.6 billion) compared with budget estimates for the current fiscal year.

Reuters

Panel to submit report on one regulator for pension products

Panel to submit report on one regulator for pension products

Mumbai: A panel formed by the government to look into the issue of bringing all pension products under one regulator is likely to submit its report shortly, a top official of pension watchdog PFRDA said today.

At present, pension products are being regulated by multiple financial regulators like PFRDA, Sebi, Irdai and EPFO.

However, Pension Fund Regulatory and Development Authority (PFRDA) has urged the government to bring all such products under it.

“A proposal has been already put to the government to have a single regulator for all kinds of pension products in the country.

“The government has set up a committee to discuss the issue. The committee is likely to give its recommendation shortly,” PFRDA Chairman Hemant Contractor told reporters on the sidelines of a CII event here.

Apart from PFRDA, the panel has members from other regulators like Sebi, Irdai and EPFO.

PFRDA has also asked the Centre to allow private sector fund managers to manage the pension funds for government employees and it is hopeful of getting the government’s nod in a month’s time.

At present, only the three state-owned fund managers are managing such funds, he said.

Moreover, the board of PFRDA has already approved increasing equity exposure in the National Pension System (NPS) to 75 per cent from existing below 50 per cent, Contractor said.

Regarding Atal Pension Yojana (APY), he said rural populace is coming forward and opting for the government-sponsored plan.

“At present, 52 per cent of subscribers under APY comprise rural folks, which was not the case a year ago when the scheme was launched.

“This has become possible only when the regional rural banks and post offices joined the distribution channel for the scheme,” he said.

Total accumulation of funds under APY currently stands at Rs 900 crore, he said.

Except for West Bengal and Tripura, all states have agreed to implement the APY scheme for their employees, Contractor said, adding that PFRDA is in talks with these two states for the same.

PTI