Central government employees can look forward to fatter salary cheques as the Union cabinet is likely to take up the 7th Pay Commission recommendations on Wednesday.
The commission has recommended an average 23.55% increase in their salary, allowances and pension, a move that will benefit 4.8 million staffers and 5.5 million pensioners.
The commission headed by justice (retired) AK Mathur had presented its 900-page report to finance minister Arun Jaitley in November 2015.
In January, the government had set up an empowered committee of secretaries headed by cabinet secretary PK Sinha to examine the panel’s suggestions. A secretariat has also been set up within the finance ministry to oversee the panel’s recommendations.
The cabinet is expected to discuss on Wednesday the Sinha committee’s report on implementation of the pay panel’s recommendations. The salary hikes will be effective from January 1, 2016.
A PTI report said on Tuesday the Cabinet was likely to approve higher increase in basic pay than the nearly 15% recommended by the panel. The pay panel had recommended a 14.27% hike in basic pay at junior levels, the lowest in 70 years. The previous 6th Pay Commission had recommended a 20% hike, which the government doubled while implementing it in 2008. After considering the increase proposed in allowances, the hike in remunerations comes to 23.55%.
“Considering the tight fiscal position this year, the government may improve upon the pay commission recommendation for basic pay to 18% or at best 20%,” a senior official told PTI.
More cash in hand is likely to result in higher consumption by the government’s massive employee base, which accounts for a large segment of the Indian middle-class. More demand could boost the economy through higher spending on assets such as cars and housing.
The government usually accepts the broad proposals for pay revision — due every 10 years and state governments usually respond with their own hikes.
The Centre’s total salary and allowances bill for 2016-17 has been pegged at Rs 1.84 lakh crore, which is Rs 65,687 crore or 55% higher than last year’s Rs 1.18 lakh crore. The higher wage bill for this year partly factors in the anticipated increase in employee remuneration.
The pay commission’s recommendations say a fresh IAS recruit will get a basic salary of Rs 56,000 a month against Rs 23,000 currently, while a sepoy in the Indian Army will earn Rs 21,700 a month from Rs 8,460 at present. In addition, employees are paid dearness allowance and house rent among many other allowances.
If accepted, the new proposals will set Rs 18,000 as the minimum pay of an employee on the central government’s rolls. At present, the minimum salary is Rs 7,000.
The total emoluments of a general helper — the lowest-ranked employee — amount to ?22,579, more than double that of his counterpart in the private sector, a study commissioned by the panel found.
The commission has proposed a change in the salary structure by doing away with the system of pay bands and grade pay and recommended “pay matrix”. It has also called for scrapping overtime allowance and interest-free loans to buy motor vehicles.