New Delhi: In what can be termed as a major bonanza for around one crore Central government employees as well as pensionees, the Union Cabinet on Wednesday accepted all the recommendations made by the Seventh Pay Commission that will result in about 23.55 per cent overall increase in their salaries and pensions.
The move is expected to give a big boost to the economy as consumption demand in urban areas is likely to rise due to the rising income levels.
The Union Cabinet on Wednesday accepted the recommendation of Justice A.K. Mathur headed panel due to which there would be a recurring burden of Rs 72,800 crore every year, while the current fiscal’s burden would be Rs 84,933 crore in view of the fact that they would be implemented from January 1, 2016.
The major decision comes months before the high-stakes Uttar Pradesh assembly polls scheduled for early next year.
Central Government employees and pensionees will now get 2.5 times hike in basic pay and pensions that will cost the exchequer annually Rs 1.02 lakh crore, which the Government says will have a multiplier effect on economy.
The recommendations come into effect from January 1, 2016. There are a total of 47 lakh Central Government employees and 53 lakh pensionees, of which 14 lakh employees and 18 lakh pensionees are from the defence forces. The arrears of pay and pensionary benefits will be given in a phased manner during the current financial year itself, unlike in the past when parts of arrears were paid in the next financial year, official sources said. The hiked salaries will be payable from August 1, 2016 onwards.
“After implementation of 7th Pay Commission report, Government salaries are distinctively higher than the market salaries and the private sector salaries,”
Finance Minister Arun Jaitley told media persons while giving the details of the Cabinet’s decision. As per the revised scales, the entry-level basic pay will go up from the existing Rs 7,000 per month to Rs 18,000, while at the highest level i.e. at the rank of Cabinet Secretary, it would go up from Rs 90,000 to Rs 2.5 lakh. For Class 1 officers, the starting salary will be Rs 56,100.
While the Cabinet in its meeting, chaired by Prime Minister, accepted the recommendations of the 7th Pay Commission, a decision on its suggestions relating to allowances has been referred to a Committee headed by Finance Secretary. Mr Jaitley said that the Government salaries have to be respectable in comparison to the private sector.
