Seventh Pay Commission Report on Salary Hikes: Top 10 Developments

Seventh Pay Commission

Seventh Pay Commission Report on Salary Hikes: Top 10 Developments

The Seventh Pay Commission headed by Justice A K Mathur will submit its report to Finance Minister Arun Jaitley on Thursday. Recommendations of the Seventh Pay Commission will go to the Cabinet and are likely to be implemented with effect from January 1, 2016.

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Here are 10 things to know:

1) The Seventh Pay Commission will likely recommend a nearly 15 per cent hike in basic salary for 50 lakh central government employees and 54 lakh pensioners, sources told NDTV.

2) The 15 per cent increase in basic salary along with a hike in dearness allowance (DA) will lead to an overall jump of 22-23 per cent hike in salaries, PTI said citing sources.

3) The Seventh Pay Commission is also believed to have recommended an increase in house rent allowance (HRA).

4) The Seventh Pay Commission has likely proposed a status quo on the retirement age of central government employees, sources said. Retirement age for central government employees is 60 years now.

5) The 15 per cent salary hike likely to be recommended by the Seventh Pay Commission will be much lower than the 35 per cent hike employees got on implementation of the Sixth Pay Commission in 2008.

6) Central government employees had also got large sums in arrears because the Sixth Pay Commission was implemented with effect from January 1, 2006.

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7) A 15 per cent salary increase would push up the central government’s salary bill by Rs 25,000 crore, which is 0.2 per cent of India’s GDP, according to Bank of America Merrill Lynch estimates.

8) Economists expect the wage hikes to boost consumption-driven recovery in the domestic economy. Sales of affordable homes and consumer durables such as cars, two-wheelers and other electronic items are likely to pick up, analysts say. On the flip side, salary hikes are also expected to stoke inflation and fiscal pressures, economists say.

9) Sajjid Chinoy, India economist of JP Morgan, termed the potential 15 per cent salary hike as “conservative” and said that it will be “well received” by markets as it would put less pressure on the government’s finances.

“Remember the fiscal deficit this year is well on course to touch 3.9 per cent, that 3.9 has to go 3.5 and 3.5 has to go 3. So we are looking at nearly a 1 per cent of GDP fiscal consolidation over the next two years,” Mr Chinoy told NDTV.

10) The central government constitutes the pay commission every 10 years to revise the pay scale of its employees and often these are adopted by states after some modifications.

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