7th Pay Commission: Discussion Held On Various Key Issues In Context Of States’ Finance
New Delhi: At a time when lakhs of Central and State Government employees are awaiting hike in minimum pay following the implementation of the recommendations of the 7th Pay Commission, the Finance Commission recently held consultations with senior officials of the Ministry of Finance on the overall economic situation and key economic variables. These discussions were credible to the ongoing work of the Commission to reach an appropriate conclusion on both the vertical and the horizontal devolution. Detailed discussions have continued over the last few months with the Finance Ministry on the issues of the consequences of UDAY and 7th Pay Commission particularly in the context of the finances of the States.
Apart from the Commission’s Chairman and Members Ajay Narayan Jha, Dr. Anoop Singh, the Finance Ministry were represented by Subhash Chandra Garg Finance Secretary, Ajay Bhushan Pandey Revenue Secretary, Girish Chandra Murmu, Expenditure Secretary, Dr. Krishnamurthy Subramanian Chief Economic Adviser, P C Mody Chairman CBDT, PK Das, Chairman CBIC and other senior officials of the Finance Ministry and the Finance Commission.
The Commission observed that the GDP numbers have somewhat fluctuated within the overall global trend which suggests continued high growth trend over the medium term. The Commission also noted that the revenue projections on the Direct Taxes are healthy though on Indirect Taxes, there have been periodic fluctuations. On the expenditure trend, there were discussions in regard to the rationalisation of the Centrally Sponsored Schemes in sync with the new life cycle, they being co-terminus with the Finance Commissions.
The Finance Ministry presented before the Commission some preliminary views of the Government on the Financial Terms of Reference of the Commission. The economic development in the last 5 years were analysed in detail with specific focus on Growth, Investments, Industrial Production, Banking and Payments, Inflation and Monetary Policy, External Sector, Medium Term Outlook. The Ministry made its projections for 2018-19 and 2019-20 to the Commission along with its projections for the award period of the XVFC, which is 2020-21 to 2024-25.
The Finance Ministry gave some accounts and overviews of Receipt and Expenditure Forecast including a fiscal overview of XIVFC vs. XVFC both a percentage of GDP and as percentage of GRR. They also made a resource forecast which included tax projections; and a comparative picture of tax growth and buoyancy. The expenditure projections made by the Ministry included expenditure classifications and requirements; expenditure of the Central Government during the award period of the XIVFC and the expenditure requirements during the award period of the XVFC.
The Ministry and the Commission had a detailed discussion on fiscal management in which the Ministry put up a number of suggestions for consideration of the Commission. Discussions were also held on GST issues, local body grants and population data.
The Commission is now awaiting the full Memorandum of the Government of India through Finance Ministry which is expected to be delivered soon.