A Committee of Secretaries (CoS) headed by Cabinet Secretary PK Sinha has submitted its report on the recommendations of the 7th Pay Commission.
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The move, which will impact almost 50 lakh employees and 58 lakh pensioners, is likely to be implemented from January 1. This is built around the recommendation for a 14.27 per cent hike in basic pay.
The Union Cabinet which approved a hefty pay hike for Central government staff and pensioners on Wednesday dispensed with the present system of pay bands and grade pay and okayed a new pay matrix as recommended by the Pay Commission. The 23.55 per cent increase includes hike in allowances.
Maximum Pay: Rs 2,25,000 per month for Apex Scale and Rs 2,50,000 per month for Cabinet Secretary and others presently at the same pay level. The increment is expected to cost the taxpayer an additional Rs. 1.02 lakh crore annually, or almost 0.7 per cent of the GDP. “While the employees will get salary arrears from January 1, 2016, allowances will be paid only from July 1, 2016”, it said.
The UPA government in February 2014 had set up the commission to revise remuneration of the central government employees. The panel recommended the maximum salary to be 3.25 lakh.
According to the commission report, the financial impact in 2016-17 will be Rs.1,02,100 crore. Jaitley, however, countered, stating, “Government salaries are distinctively higher than private sector salaries after the 7th Pay Panel”.
India Ratings secures the net influence on the central government finances at Rs 80,600 crore. “There will be an additional implication of Rs 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16”, Jaitley added.
Ind-Ra says it believes the impact of pay revision of state government employees will be felt only in FY18.
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The central government employees Unions leaders on Wednesday said the approved hike was lowest in many decades and were not in sync with inflation. The current minimum pay is Rs 7,000. It also recommended a revised pension formulation for civil employees including CAPF personnel and Defense personnel who have retired before the effective date.
