Sixth Pay Commission: Centre to pump in Rs 30,000 crore through supplementary demand

Sixth Pay Commission: Centre to pump in Rs 30,000 crore through supplementary demand

Economy Bureau

Oct 16, 2008

After announcing a slew of measures to address concerns over inadequate liquidity, the government is expected to pump in at least another Rs 30,000 crore of cash when it raises the first and second batch of supplementary demand for grants in Parliament next week.

With its obligations under the Sixth Pay Commission, farm loan waiver and oil and fertiliser bonds, back of the envelope calculations reveal that this year it could rise to as much as Rs 60,000 crore. The government raised a total of Rs 53,703 crore in the first and second supplementary demand for grants in 2007-08.

Of this about Rs 30,000 crore is likely to be raised as cash while the balance would be matched through savings and recoveries by administrative departments and ministries. The money would come in handy at a time when the economy is reeling under a credit crisis.

In fact stressing that the domestic credit situation would improve, finance minister P Chidambaram had said last week, “Ten or 12 days from today, when the supplementary (spending bill) is passed, a substantial amount of liquidity will be infused into the market.”

Getting additional funds through the demand for grants for the fiscal will be a key issue for the UPA government since this is the last full session of the Lok Sabha before general elections are announced. Government functioning and more importantly implementation of key social sector programmes will be affected without the requisite funds.

Although the government is trying to cut down costs, it has to foot a heavy expenditure bill with payouts for the sixth pay commission pay out. As per the pay commission’s recommendations, the salary hikes will cost Rs 22,100 crore this fiscal, while the farm loans to be waived in three installments is estimated at Rs 71,680 crore. The government has also budgeted Rs 7,500 crore for fertiliser bonds. Oil bonds for the fourth quarter of 2007-08 amounting to Rs 14,956 crore and for the first quarter of 2008-09 estimated at Rs 24,408 crore will be issued after parliamentary nod.

Source: http://www.financialexpress.com/