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Pay Commission serves as stimulus for GDP growth

business Updated: Feb 10, 2009 20:33 IST
Arnab Hazra
Arnab Hazra
Hindustan Times
Pay Commission serves as stimulus for GDP growth

This increased money in the pockets of babus appears to have arrested a further fall in India’s growth as adverse effects of a global meltdown showed definite signs of cascading through most sectors of the broader economy.

The Rs 28,505 crore bonanza by way of higher wages of more than five million central government employees have ensured that “Community, Social and Personal Services” have bucked the trend to grow at robust 9.3 per cent—sharply higher than last year’s 6.8 per cent growth.

Importantly, the pay arrears of government servants would contribute a staggering 75 per cent of the sub-group’s growth in 2008-09. As a sub-group “Community, Social and Personal Services” has seldom been the focus of economic analysis, but this time around it would contribute 13.4 per cent of the Gross Domestic Product.

“The income generated by roadside mechanic also comes under this category,” an official familiar with government data collation, said.

Growth in 6 of the remain sub-sectors are estimated to drop sharply. Manufacturing growth is expected to fall to 4.1 per cent from 8.2 per cent last year, agriculture 2.6 per cent against nearly 5 per cent last year. Mining and quarrying is the only sector, apart from “community, social and personal services”, that is expected to clock a strong growth this year.