Over 23% pay hike likely for govt. employees, pensioners

 The Finance Ministry is set to propose on Wednesday a 23.55 per cent overall increase in salaries and pensions for more than 1 crore government employees and pensioners, in line with the 7th Pay Commission’s recommendations. The cost to the exchequer on this account is estimated at Rs.1.02 lakh crore.

It remains to be seen if the Union Cabinet headed by Prime Minister Narendra Modi will seek to emulate the UPA government, which had in 2008 approved increases that surpassed the recommendations received from the 6th Pay Commission.

In November 2015, the pay panel had recommended increases of 16 per cent in pay and 24 per cent in pensions within the overall 23.55 per cent. Its estimate was that these recommendations could result in an additional outgo of almost 0.65 per cent of the GDP.

The 6th Pay Commission had recommended a 20 per cent increase, which the UPA government doubled while implementing it in 2008. The resultant hit to the exchequer of 0.77 per cent of GDP doubled the Centre’s fiscal deficit to 6 per cent in 2008-09, the year it was implemented.

“As far as the Finance Ministry is concerned, the recommendation is to keep the hike proposals non-controversial and plain, with an eye on the fiscal deficit target…it will be for the Union Cabinet to decide if it wants greater hikes than proposed,” a top government source told The Hindu. The government doesn’t normally like to appear profligate, he added.

On the contentious issue of non-functional upgrade, on which the 7th Pay Commission had failed to reach consensus, the Ministry’s note for the Cabinet’s consideration recommends maintaining status quo, the source said.

The Commission’s Chairman, Justice A.K. Mathur, was of the view that the upgrade availed by all the organised group ‘A’ services should be continued and extended to all officers in the Central Armed Police Forces, Indian Coast Guard and the defence forces. Its two members — Rathin Roy and Vivek Rae — recommended abolition of the upgrade at the senior administrative grade and the higher administrative grade levels. The increases are likely to be effective from January 1, 2016. The arrears for the six months could be paid in one go or in instalments.

Of the total financial impact of Rs.1.02 lakh crore, the panel proposed that Rs.73,650 crore be borne by the General Budget and the remaining Rs.24,450 crore by the Railway Budget. It suggested raising entry level pay to Rs.18,000 per month from the current Rs.7,000. The recommended maximum pay for the Cabinet Secretary is Rs.2.5 lakh per month against the current Rs.90,000. Earlier, a panel headed Cabinet Secretary P.K. Sinha, vetted the pay panel’s recommendations that will impact remunerations of almost 50 lakh Central Government employees and 58 lakh pensioners.


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