Good news for Central government employees and pensioners. The 7th Pay Commission will be submitting its report to the finance ministry and most likely to recommend 15 percent pay / salary hike. This looks disappointing compared to the previous pay commissions but the pay hike in real terms will be around 23 percent as per the estimations of the Government. The recommendations will come into effect from 1 January 2016.
The recommendations of 7th Pay Commission will come into force after the approval of Central Cabinet and this will impact 50 lakh central government employees and another 54 lakh pensioners.
The 6th Pay Commission has recommended 35 percent hike in salaries for employees in 2008. Hence the 15 percent salary hike likely to be recommended by the 7th Pay Commission will be much lower than the 6th Pay Commission recommendation.
A 15 percent salary hike would increase the central government’s salary bill by Rs 25,000 crore. This is 0.2 percent of India’s GDP. It is reported that the 7th Pay Commission is unlikely to suggest changes in the retirement age of central government employees. The Central Government set up Pay Commissions to review the salary structure of central government employees every 10 years.