Pay panel award to cost Railways Rs. 13,600 crore

budget 2009                   rail budget 2009

The Sixth Pay Commission award to 14 lakh employees and 11 lakh pensioners will cost the Indian Railways Rs 13,600 crore during 2008-09 and over Rs 14,000 crore in the coming fiscal.

The 2008-09 Rail Budget had originally provided for an ad-hoc allocation of Rs 5,000 crore to meet the incremental commitments arising from the Pay Commission award, including Rs 4,000 crore towards salaries and Rs 1,000 crore on account of pensions.

But, according to the revised estimates presented on Friday, the outgo would be much higher at Rs 13,596 crore – Rs 9,000 crore for salaries and the remaining towards pension.

Worse, for the coming fiscal, the total provision is Rs 14,614 crore (Rs 9,952 crore on salaries and Rs 4,662 crore on pension).

“If there was no Pay Commission award, staff costs would have constituted 44 per cent of our ordinary working expenses. But now, this would go up to 50 per cent this fiscal and a budgeted 52 per cent for 2009-10,” the Financial Commissioner of Indian Railways, Ms Sowmya Raghavan. But huge % is for Officer’s Pay & Pensioners Pension Only!

But, according to her, much of this extra burden is due to arrears that are in the nature of a one-time payment liability.

“The arrears component works out to Rs 15,700 crore (Rs 11,000 crore salaries and Rs 4,700 crore pension) payable over two years. The situation will hopefully revert to normal by 2010-11,” she added.

In his Interim Budget speech, the Railway Minister, Mr Lalu Prasad, sought to underplay the Pay Commission impact, claiming that the organisation will implement its recommendations “with relative ease” because of its “strong financial position”.

Unlike the experience during the Fifth Pay Commission, when the Railways ended up deferring payment of dividend to the tune of Rs 2,800 crore in 2001 and 2002, no default will take place this time, he said.

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