Published On: Tue, Nov 17th, 2015

15% salary hike likely in 7th Pay Commission

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Central government is likely to announce a 15% hike in salaries starting from January 1, 2016, according to media reports.  The Seventh pay Commission is expected to submit the final report on November 20 to the Finance Ministry.  According to reports, this recommendation is likely to impact 50 lakh central government employees and 54 lakh pensioners.

A 15 per cent salary increase would push up the central government’s salary bill by Rs 25,000 crore, which is 0.2 per cent of India’s GDP, according to Bank of America Merrill Lynch estimates.

Economists expect the wage hikes to boost the consumption-driven recovery in the domestic economy. Sales of affordable homes and consumer durables such as cars, two-wheelers and other electronic items are likely to pick up, analysts say.

On the flip side, salary hikes are also expected to stoke inflation and fiscal pressures, economists say.

The 900-page report is believed to have made suggestions on parity of 36 organized Group A services with the IAS which has so far largely dominated in superior positions in the central government.

The pay panel was constituted in February 2014 and was asked to submit its report within 18 months. However, in August the government gave the panel four months extension to submit its report by December.

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