The Seventh Central Pay Commission has recommended a 23.55% increase in the pay and pensions of nearly 47 lakh government employees and 52 lakh retirees that could result in a demand-led economic boost but significantly challenge India's ongoing fiscal consolidation plan.
The award will be applicable from January 1, 2016. “An implementation secretariat headed by expenditure secretary is being created to look at implementation of seventh pay commission recommendations,“ Finance Minister Arun Jaitley said soon after the panel headed by Justice AK Mathur submitted the report.
Breaking down the headline number, the commission has proposed an increase of 16% in pay , 63% in allowances and 24% in pensions, adding up to a total Rs.1.02 lakh crore in FY16. The financial impact on the Budget will be Rs.73,650 crore and Rs.28,450 crore on the railways, Jaitley said.
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