Indian government announces implementation of ‘7th Pay Commission’

50 lakh central government employees to get heavy increment

58 lakh pensioner gets hike in their pensions

National treasury will get strained of an additional 1 lakh crore rupees or more.

New Delhi, Dated 29^th June (News Agency)–The government on Wednesday announced the execution of the recommendations made by the 7^th pay commission. With this declaration the employees of the central government will get a heavy increment of 23.55%. The execution of these recommendations will prove beneficial for 50 lakhs central government employees and 58 lakhs pensioners. But this hike in salary would mean an additional 1.02% strain on the national treasury. These increments have been announced effective from 1^st of January 2016.

Prime Minister Modi chaired the central cabinet committee meeting that was held on Wednesday. The recommendation made by the 7th pay commission was approved in the same meeting. Immediately after the event, the Finance Minister Mr. Arun Jaitley through a tweet congratulated the central government employees. Many employee unions had been requesting for the 7^th pay commission for quite some time now. All the central government employees and the pensioners have been eagerly awaiting the announcement of the 7^th pay commission by the government.

Last year the government had received a report from the pay commission. It was after the receipt of this report, that the Government appointed a high level committee chaired by cabinet secretaries. This committee submitted its final recommendations report to the finance ministry last week.

As per the recommendations made by the 7^th pay commission, the basic salary of the central government employees has increased by 14.7%. The current announcement of the increment in salaries has come after a decade, and yet it is considered as the lowest increment in the last 70 years. As compared to the commitment of the 6^th pay commission in 2008, when the basic salary of a central government employee had been increased by 20%.

There is an increase of 23.55 %, if the basic salary is clubbed with the rest of the payment structure. So effectively a central government employee would get an increment in the range of Rs.18000 being the lowest and Rs. 2.5 lakhs being the highest compensation in the salary structure.

The decision of implementing the recommendations of the 7^th pay commission put a strain on the national treasury. The government has spent around 0.7% of the GDP amount on these increments, amounting to approximately Rs. 1.02 lakh crores comprising Rs. 0.391 lakh crores on basic increments, Rs. 0.293 lakh crores on perks and Rs. 0.337 lakh crores on pension.

However, this may turn out to be favourable for the Indian economy. Some 50 lakh government employees would spend more on consumerism, purchasing cars, houses that would increase demand which will further boost the economy. Increasing demand will lead to increase in prices, inflation and interest rates which will again need to be corrected.

Pressure is mounting on state governments as well to follow suit and implement the recommendations of the 7^th pay commission.