The Seventh Pay Commission headed by Justice A K Mathur submitted its report to Finance Minister Arun Jaitley on Thursday and recommended a 16 per cent hike in the pay of 50 lakh central government employees.
Recommendations of the Seventh Pay Commission will go to the Cabinet and are likely to be implemented with effect from January 1, 2016.
As per the recommendations the minimum pay in government is to be set at Rs 18,000 per month, while the maximum pay is recommended as Rs 2,25,000 per month for Apex scale and Rs 250000 per month for Cabinet Secretary and others at the same level.
The panel has suggested abolition of the pay band and the grade pay, though it retained the annual increment of 3 per cent.
In percentage terms the overall increase in pay and allowances and pension will be 23.55 per cent.
"Within this the increase in pay will be 16 per cent, increase in allowances will be 63 per cent and increase in pension would be 24 per cent," the Finance Ministry said.
Government employees had received a 35 per cent hike on implementation of the Sixth Pay Commission in 2008.
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.
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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