Expenditure Secretary Manoj Govil is confident that capital spending will gain momentum in the coming months, citing visible signs of progress. In an exclusive interview, he shared his insights into the current pace of expenditure and outlined the government’s plans for the 8th Pay Commission.
Govil acknowledged that capital expenditure (Capex) had fallen short of budgeted levels this year, attributing part of the delay to the timing of the budget approval and the political climate. “The Budget was presented in July, but the approval process was delayed until August.
Additionally, the pre-election period slowed down expenditure,” Govil explained. He pointed out that election-related activities, including the Model Code of Conduct, hindered some government activities, with officers and staff being diverted for election duties.
However, he noted that capital spending has shown improvement since then. “We have preliminary figures up to January, and for April-January this year, our capital expenditure is about Rs 30,000 crore higher than the same period last year, which was unaffected by elections,” he said. He remains hopeful that the government will either meet or surpass its revised capex estimate of Rs 10.18 lakh crore by the end of the year.
No Immediate Fiscal Impact From Pay Commission
On the topic of the 8th Pay Commission, Govil reassured that its financial impact would not be felt in the next financial year. “Once the Pay Commission is set up, it will take some time for the report to be submitted, processed, and implemented.
As a result, we do not expect any significant financial outgo in the next financial year,” he clarified. He added that the financial impact would begin in the fiscal year starting April 2026.
Pay Commission To Be Set Up by April
Govil expressed optimism that the 8th Pay Commission would be established by April. “We hope to set it up soon, maybe within the next couple of months. We are currently awaiting feedback from the Ministry of Home Affairs, the Ministry of Defence, and the Department of Personnel and Training (DoPT) on the draft terms of reference (TOR). Once we receive their suggestions, we will frame the TOR and seek Cabinet approval,” he stated.
The committee tasked with assessing the financial implications of the Pay Commission estimated that the implementation would cost Rs 6,250 crore annually. Additionally, Rs 800 crore will be needed to cover arrears for retirees under the National Pension System (NPS).
Govil noted that the first year’s requirement would total around Rs 7,000 crore, with subsequent years seeing a recurring outlay of Rs 6,250 crore, which could increase due to rising pay scales and dearness allowance.
One of the key issues surrounding the Pay Commission is the transition to the new Uniform Pension Scheme (UPS). Govil highlighted that the UPS offers inflation protection, making it an attractive option for employees compared to the National Pension System (NPS).
“The UPS is designed to provide full inflation utilization, which makes it more appealing than the NPS, where annuities may not be inflation-protected,” he explained. He assured that the transition would be a choice-based system, giving employees the flexibility to decide which scheme they prefer.
States Show Interest In Adopting UPS
Govil also addressed the question of states’ willingness to adopt UPS for their employees. He revealed that several states have already shown interest in implementing the scheme even before the formal Gazette notification. “Some states have expressed their intent to implement UPS, and the Pension Fund Regulatory and Development Authority (PFRDA) has issued draft regulations.
Once the comments are reviewed, the final regulations will be issued, and the process for employee selection will begin,” he said.
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The central government’s rules are in place, Govil anticipates that many state governments will follow suit. “Once the rules are established, PFRDA will develop a mechanism to help state governments set up UPS for their employees,” he added.
Govil’s comments provide a clear picture of the government’s priorities, including accelerating capital spending and implementing the long-awaited Pay Commission, both of which will have significant implications for India’s economy and its public sector employees in the coming years.
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