Govt approves 7th pay commission

This reflects a compression ratio of 1:3.12 signifying that pay of a Class I officer on direct recruitment will be three times the pay of an entrant at lowest level, it said.

As recommended by the pay panel, the minimum monthly salary for a central government employee has been fixed at Rs 18,000 from earlier Rs 7,000. The ceiling on gratuity will increase by 25 per cent whenever DA rises by 50 per cent. He said, the total financial impact in the current financial year due to the implementation of the Pay Commission is likely to be 1.02 lakh crore rupees. He added the hike in salaries and allowances is a mere 15 per cent on basic pay and not 23.5 per cent as is being wrongly claimed by the government.

India Ratings secures the net influence on the central government finances at Rs 80,600 crore.

Sources also revealed it would be real circus for the government to implement the 7 Pay Commission recommendation in toto, considering the financial crisis the state is presently going through.

When these recommendations were made, inflation was moderate.

Citing the example of former Prime Minister Manmohan Singh, he said: “Manmohan Singh was a great economist and he was the architect of this scheme. he served as Finance Minister and even as Prime Minister and during his regime there was jobless growth”.

“We are happy whatever the government decides”.

Jaitley said he was confident that the fiscal deficit target of 3.5 per cent of GDP for 2016-17 would be met as the Union Budget has provided for the Pay Commission payout. The RBI’s current reflation forecasts did not take into account the influence of salary hike.

“When people get more money, it comes back in the system in the form of taxation”.

When some 10 million Indians earn more every month, consumption and savings will likely increase.

The government had set up an Empowered Committee of Secretaries under Cabinet Secretary PK Sinha in January to look into the Pay Commission recommendations.

The government has deferred the suggestions on allowances for now as Finance Secretary-led committee will further examine suggestions on the same. However, it did not approve the 63 per cent recommended increase in allowances. Employees will also get interest-free advance for computers as also for medical treatment and other exigencies. All other interest free advances have been abolished. “Out of this there will be 14 lakh serving defence personnel and 18 lakh pensioners among the defence personnel”, Jaitley said.

“It is unfortunate that the government did not consider it worthwhile to have discussions with the employees’ organisations before making the announcement on salaries and pension”, the party said.

Calling the pay hike approved by the Cabinet “unacceptable”, they have threatened to go on a strike next week, to protest against the hike. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the Pay Matrix.