March 27th, 2008 
Tejinder The series of proposals made by the 6th pay commission, if implemented would cost the government Rs 12,561 crore -in 2008-09. In addition it would involve an additional one-time burden of Rs 18060 crore on payment of arrears.
“The Government may pay the arrears in two installments in different years which will mean that the expenditure on this account will be of Rs.6321 crore in Central Budget and Rs.2709 crore in Railway Budget for each of the two years,” the report said. Savings of Rs 4586 crore is likely to accrue on account of various measures suggested in the report. The net financial implication in 2008-09 is estimated to be Rs 7975 crore.
Total cost of implementing the revised pay bands is expected to be Rs.5468 crore per annum. This includes the annual expenditure of Rs.3828 crore on revised pay bands for civilian employees and expenditure of RS.1640 crore per annum for revised pay bands in the Defence Forces.
The biggest saving of Rs 1,800 crore could come from lateral movement of defence forces personnel to central Para-military forces, followed by Rs 1,000 crore on account of rectification of commutation of pension formula. The cost of revised pay band, aimed at averting stagnation at any given level, to the exchequer would be Rs 5,468 crore, including Rs 3,828 crore for civilian and Rs 1,640 crore for defence personnel.
The Commission recommended that the arrears of Rs 18,060 crore be paid in two installments in different years and clarified that the union budget would have to account for as much as Rs 12,642 crore, while the balance of Rs 5,418 crore would have to be provided for in the railway budget. Two installments would lead to a burden of Rs 6,321 crore in the central budget and Rs 2,709 crore in the railway budget in each year.
”Including the expenditure on payment of arrears, the additional expenditure for the year 2008 for the government will be Rs 15,563 crore in case arrears are paid over a period of two years with the remaining expenditure of Rs 6,028 crore being borne by the railways in their budget,” the report said.
“A major departure from the earlier pay commission has been made in respect of pay scales… a conscious departure have been made of in recommending running pay band.” Existing expenditure on gratuity is estimated at Rs 2,515 crore p.a. Increased payments on account of the increase in pay scales will result in an additional annual expenditure of Rs 360 crore approximately.
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