BL reported that the Sixth Pay Commission award to 1.4 million employees and 1.1 million pensioners will cost the Indian Railways INR 13,600 crore during 2008-09 and over INR 14,000 crore in the coming fiscal.
The 2008-09 rail budget had originally provided for an ad-hoc allocation of INR 5,000 crore to meet the incremental commitments arising from the Pay Commission award, including INR 4,000 crore towards salaries and INR 1,000 crore on account of pensions.
But, according to the revised estimates presented on Friday, the outgo would be much higher at INR 13,596 crore to INR 9,000 crore for salaries and the remaining towards pension.
Ms Sowmya Raghavan the Financial Commissioner of Indian Railways said that “If there was no Pay Commission award, staff costs would have constituted 44% of our ordinary working expenses. But now, this would go up to 50% this fiscal and a budgeted 52% for 2009-10.”
According to her, much of this extra burden is due to arrears that are in the nature of a one time payment liability. Ms Raghavan said that “The arrears component works out to IINR 15,700 crore payable over 2 years. The situation will hopefully revert to normal by 2010-11.”
In his Interim Budget speech, Mr Lalu Prasad the Railway Minister sought to underplay the Pay Commission impact claiming that the organization will implement its recommendations with relative ease because of its strong financial position. He said that unlike the experience during the Fifth Pay Commission, when the Railways ended up deferring payment of dividend to the tune of INR 2,800 crore in 2001 and 2002, no default will take place this time.
(Sourced from Business Line)
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