7th Pay Commission Report

U.S. firm Fitch Ratings on Friday said the 24 percent hike in salaries and pensions for current and former government employees recommended by the 7th Pay Commission could hurt India’s finances and efforts to control the fiscal deficit. The break-up of this hike is as follows: 16 per cent hike in basic pay, 24 per cent increase in pension and 63 per cent increase in allowances.

Here’s some good news to all the Central government employees as the Seventh Pay Commission proposed a hike in salaries to all the central government employees. Under this new pension scheme, the pensioners will be first included in the new Pay Matrix being suggested by the panel on basis of Pay Band and Grade Pay at which they retired, and their pension will be calculated on basis of current pay scale.

At a time when the government is pursuing the path of fiscal consolidation, the pay commission recommendations will pose a serious challenge in terms of not deviating from the fiscal deficit targets as announced in the FY16 Budget, India Ratings said. Notably, the government still needs to formally adopt these proposals.

“In order to implement the pay commission recommendations, a secretariat will be set up under the expenditure secretary. But government always has broad estimation of what is going to be the impact of a new pay commission recommendation and accordingly internally a kind of risk matrix is prepared”, he said. They will also have a cascading effect on employees of PSUs, autonomous bodies and universities.

“If (the recommendations of 7th Pay Commission are) adopted, bulk of the impact will be absorbed by the FY2016-2017 Budget and are scheduled to be implemented from January 2016 onwards”.

The commission has sought to extend an olive branch to the security forces now agitated over Orop by addressing key grievances of the various uniformed services. “Around Rs 74,000 crore would be the impact on the Union Budget and Rs 28,000 crore on the Railway Budget”, Mr Jaitley said at his residence after he received the report from Justice A.K. Mathur, Chairperson of the Commission. Similarly, the maximum salary has also been fixed at Rs. 2,25,000 per month for Apex Scale & Cabinet Secretary and others presently at the same pay level.

In the new pay structure, the grade pay has been subsumed in the pay matrix and the status of the employee, now determined by grade pay, will now be determined by the level in the matrix.

5- The 7th Pay Commission report favoured introduction of a health insurance insurance scheme for staff and pensioners.

All postal pensioners should be covered under CGHS. Earlier, the limit was Rs 7.5 lakh. Besides, the increased purchasing power among the privileged one crore people may generate pockets of short-lived demand for automobile, consumer durables and non-durables etc, but overall this kind of extra money would lead to an inflation spiral taking the country again to high interest rate scenario, ” Rawat said.

Party’s senior spokesman Ajay Maken told reporters that Central Government Employees are “frustrated and disappointed” with the major recommendations of the Commission.