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Home > India > Business > Budget 2008-09 > Business Headline > Report

Sixth Pay Commission impact may top Rs 20,000 crore

Siddharth Zarabi, New Delhi | March 03, 2008 09:03 IST
Last Updated: March 03, 2008 09:04 IST

The impact of the impending Sixth Pay Commission recommendations is expected to be within 0.4 per cent of Gross Domestic Product, according to finance secretary D Subbarao.

The fifth Pay Commission award of 1996 had translated into an impact of 0.4 per cent of GDP then. "I do not expect it to be higher than that level this time," Subbarao told Business Standard.

Given that the Budget has projected GDP at Rs 53,03,770 crore (RS 53,037 billion) in 2008-09, the impact of the award may well be Rs 21,215 crore (RS 212.15 billion).

Subbarao added he expects the economy to grow faster than the government's ballpark estimates of a real GDP growth rate of 8.5 per cent, and annual inflation rate to be 4.5 per cent, in 2008-09.

On the question of off-Budget liabilities, the finance secretary said the Budget had acknowledged them for the first time, bringing greater transparency to the numbers.

On his part, Revenue Secretary P V Bhide said it was not possible to simultaneously increase the income tax exemption limit as well as the deduction limit under section 80C. "We cannot satisfy everyone", he said.

Bhide also said that despite the higher exemption limit, it would not take much time for those people who go out of the tax net to come back into the net, as salaries are rising 15 to 20 per cent annually. "If not this year, they will come back again as they cross the threshold limit," he said.

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