NEW DELHI: In a huge bonanza for one crore Central government employees, the Union Cabinet on Wednesday approved the implementation of the recommendations of the 7th Central Pay Commission (CPC) on pay and pensionary benefits. The move, which will benefit almost 47 lakh Central government employees and 53 lakh pensioners, will mark an increase of 23.55 per cent in pay with effect from January 1, 2016.
Briefing the media after the Cabinet announcement, Finance Minister Arun Jaitley said, “Government employee salaries had to come to a respectable level to attract the best talent. Hence, the government, by and large, accepts recommendations of the 7th Pay panel and the arrears to be paid this year itself.”
For the entry level employees, the hike in basic pay will be 14.27 per cent. Hence, the minimum pay of an employee would be Rs 18,000 per month, which is more than double from the current Rs 7,000 per month. However, the maximum salary of the Cabinet Secretary and its ranks is limited to Rs 2.5 lakh. “As estimated by the 7th CPC, the additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs 1,02,100 crore. There will be an additional implication of Rs 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16,” Jaitley added.
Experts believe the extra money in the pockets of consumers is expected to provide an immediate boost to consumption demand in the economy and market.
The Cabinet, however, deferred the revision in allowances. A committee headed by Finance Secretary Ashok Lavasa will look into the pay panel recommendations in this regard as there was resentment among employees over the suggestions to scrap four allowances. Till then, existing allowances will continue.
There has been a mass protest by Confederation of Central Government Employees and Workers in Tamil Nadu as they said the recommendations are not acceptable in view of the prevailing economic conditions, and threatened to advance by a week an indefinite strike to press their demand for revising the hike. Jaitley, however, countered, stating, “Government salaries are distinctively higher than private sector salaries after the 7th Pay Panel. So there should not be any protests.”