7th Pay Commission: Govt may clear big hikes

The Union Cabinet may announce the implementation of Seventh Pay Commission today that would hike the salaries and allowances for over 1 crore central government employees and pensioners by at least 23.5 per cent.

Implementation of new pay scales recommended by the 7th Pay Commission is estimated to put an additional burden of Rs 1.02 lakh crore on the exchequer annually or nearly 0.7 per cent of GDP. The hike, however is the lowest in last seven decades.

The government however is eyeing the economic push the move will provide to the sluggish demand scenario in the economy.

The panel headed by Cabinet Secretary PK Sinha was set up to study the recommendations of the pay commission headed by Justice AK Mathur.  The committee has submitted its report to the Finance Ministry.

The move will impact the remuneration of nearly 50 lakh central government employees and 58 lakh pensioners. The changes are likely to be implemented from January 1, 2016.

The key recommendation of the 7th Pay Commission is a 23.55 per cent increase in salaries, allowances and pension of central government employees and pensioners. This is built around the recommendation for a 14.27 per cent hike in basic pay.

Of the total cost of Rs. 1,02,100 crore, pay increase would cost Rs. 39,100 crore, increase in allowances Rs. 29,300 crore and increase in pension Rs. 33,700 crore.

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