Cabinet approves 23.6% overall pay hike

June 30, 2016 Hot from the Oven Valli Sarvani No comments

After much discussion and reports, the cabinet has finally taken a decision regarding the amount of hike in government employees’ overall pay. The cabinet gave its nod for a 23.6 percent increase the salary in overall pay (basic pay plus allowances). This was the amount of money recommended by the 7th Pay Commission.

Despite there being reports from some officials that there would be a higher increase than the recommendation of the 7th pay commission, this was the amount that was finally agreed upon. It seems no extra hike was offered by the cabinet.

The recommendations from the Pay Commission are to be implemented retroactively from January 1, 2016. As per the recommendations, the hike in basic pay is 14.27 per cent and the hike proposed in allowances increase the salaries by a total of 23.6 per cent. This pay hike will beneficial for 47 lakh central government employees and 52 lakh pensioners.

According to expert estimations, this increase in government employee salaries would put an additional burden of Rs 1.02 lakh crore annually on the exchequer. That amounts to around 0.7 per cent of the GDP.

Even though there hasn’t been an explicit provision for the implementation of 7th pay commission’s recommendation in the 2016-17 budget fiscal, government officials said that this once a decade increase in salary for government employees has been built in as interim allocation for different ministries. This built in interim has Rs 70,000 crore.

Furthermore, Union Finance Minister Arun Jaitley, did provision Rs. 70,000 crore for the Pay Commission’s implementation. However, the amount only covers about 60 per cent of the incremental expenditure on salaries.

The 7th pay commission was set up by the former UPA government in February 2014. Their aim is to revise remuneration of the central government employees and recommend the hike they deem fit.

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