Arun Jaitley reflects on the 7th Pay Commission

Finance Minister Arun Jaitley said that while making its recommendations the 7th Pay Commission has duly taken into account the likely financial impact of its recommendations on the ratio of expenditure on Pay, Allowances and Pension (PAP) to GDP and the fiscal deficit target. The Commission estimated 0.65 per cent increase in PAP as percentage of GDP in 2016-17 as a result of implementation of its recommendations and the total impact of its award is less than that of the 6th Pay Commission, he said.      "The Commission has, therefore expressed the view that this represents an extremely reasonable increase in PAP-GDP ratio in the initial year of the award and has felt that the macroeconomic impact of its recommendations is in conformity with the need for fiscal prudence and macro-economic stability," Jaitley said.  Accepting the Pay Commission recommendation of maintaining existing formula and methodology for calculating Dearness Allowance, the government notification said, "The reference base for calculation of Dearness Allowance after coming into force of the revised Pay structure shall undergo change accordingly and will be linked to the average index as on January 1, 2016." The notification provided for a consolidated pay package of Rs 4.5 lakh for Chairpersons of sector regulators. These included Telecom Regulatory Authority of India, Central Electricity Regulatory Commission, Insurance Regulatory and Development Authority, Securities and Exchange Board of India, Competition Commission of India, Pension Fund Regulatory and Development Authority, Petroleum and Natural Gas Regulatory Board, Warehousing Development and Regulatory Authority, and Airports Economic Regulatory Authority of India. The members of these regulators would get consolidated pay package of Rs 4 lakh a month.