7th Pay Commission: Cabinet approves big pay hike for government employees

7th Pay Commission: Cabinet approves big pay hike for government employees

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The union cabinet, led by Prime Minister Narendra Modi, on Wednesday approved the recommendations of the Seventh Pay Commission, a move which will boost consumption by putting extra disposable income in the hands of the central government’s 4.7 million employees.

The Seventh Pay Commission (7th CPC) had recommended a 23.5 per cent increase in pay, pension and allowances under a ‘business as usual’ scenario. It had envisaged an increase in pay of Rs 39,100 crore, increase in allowances of Rs 29,300 crore and increase in pension of Rs 33,700 crore, taking the total financial impact for 2016-17 to Rs 1.02 lakh crore.

The pay panel revisions are in force retrospectively from January 1, 2016.

Finance Minister Arun Jaitley had said before the budget that he would provide Rs 1.1 lakh crore and the budget documents showed that Rs 1.06 lakh crore has been provided for.

The centre is likely to provide additional details later in the day at a post-cabinet media briefing. It is not yet known if the Government Employees has cleared 7th CPC recommendations in-toto or if there are some changes.

As per the initial reports, the minimum pay has been set at Rs 18,000 per month while the maximum pay has been capped at Rs 2.5 lakh per month.

Jaitley is facing massive spending commitments this year not only due to the 7th CPC payout but also in infrastructure and agricultural sectors.

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