Finance minister Arun Jaitley said on Wednesday the minimum pay of a central government employee will now be Rs 18,000 and arrears will be paid in this financial year after the government’s decision to implement the recommendations of the 7th Pay Commission.
The finance minister said the government is “not surprised” at the additional expenditure, which is estimated at Rs 1.02 lakh crore as per official estimates.
“I have provided for these in the budget so the figures are not a surprise,” Jaitley told a press conference after the Union cabinet, chaired by Prime Minister Narendra Modi, gave its nod to the recommendations of the 7th Pay Commission headed by Ashok K Mathur.
Jaitley also said that by and large the government has decided to accept the recommendations of the pay panel.
The date of implementation for the recommendations is January 1, 2016, Jaitley said.
“Minimum pay of a government servant will now be Rs 18,000 per month,” he said, adding the arrears will be paid this financial year itself.
He said the government decision to implement the pay panel’s report and pay higher salaries was guided by the conviction that “the government employees’ salaries should be respectable”.
“It’s a mixed bag. But one thing that was behind the decision to accept the report was that the government servants’ salary has to come to a respectable level”.
This, he said, can help the government “attract best of talent” vis-a-vis the private sector. “I am not talking only of employees at senior level but at all levels,” he said.
“Among the beneficiaries include 47 lakh government employees and 53 lakh pensioners. Out of this there will be 14 lakh serving defence personnel and 18 lakh pensioners among the defence personnel,” Jaitley said.
He said the National Democratic Alliance government has taken the decision to implement the report of the 7th Pay Commission much faster than in the past.
“The decision to implement the Fifth Pay Commission (report) was taken after 19 months while for the 6th Pay Commission it was 32 months,” he said.
As regard the 7th Pay Commission, he said, a panel of secretaries headed by the cabinet secretary had studied the report and the government had decided to implement the recommendations with effect from January 1, 2016.
Answering questions, the finance minister said implementation of the pay commission would certainly bring “more money” into the system and in turn higher expenditures will also generate “demand”.
“In today’s economy it is desirable to have more demand,” he said, adding that like always in the past availability of money and higher spending will also bring some money “back into the system” through tax and other provisions.
Jaitley said the gratuity ceiling has been doubled to Rs 20 lakh and housing loan allowance hiked from Rs 7.5 lakh to Rs 25 lakh.
The recommendation for the cabinet secretary and others at the same pay level is Rs 250,000 a month, officials said.
The government had set up an Empowered Committee of Secretaries under Cabinet Secretary PK Sinha in January to look into the pay commission recommendations.