New Delhi: Union Finance Minister Arun Jaitley,  MoS for Finance Jayant Sinha and Revenue Secretary Hasmukh Adhia during a meeting with chambers of commerce & association of professionals on income declaration scheme, in New Delhi on Tuesday. PTI Photo by Manvender Vashist  (PTI6_28_2016_000148B)
New Delhi: Union Finance Minister Arun Jaitley, MoS for Finance Jayant Sinha and Revenue Secretary Hasmukh Adhia during a meeting with chambers of commerce & association of professionals on income declaration scheme, in New Delhi on Tuesday. PTI Photo by Manvender Vashist (PTI6_28_2016_000148B)

New Delhi : A hefty bonanza awaits nearly 1 crore government employees and pensioners with the Union Cabinet expected to approve the recommendations of the Seventh Pay Commission on Wednesday. The total bill for the hike is expected to be more than Rs 1 lakh crore.

In November last year, the panel had recommended a 14.27 per cent hike in basic pay at junior levels, the lowest in 70 years. After considering the increase proposed in allowances, the hike in remunerations comes to 23.55 per cent. But now there are expectations that on the basis of the report of the secretaries’ panel, headed by Cabinet Secretary P K Sinha the government may improve upon the Pay Commission recommendation for basic pay to 18 per cent or 20 per cent.

The entry level pay has been recommended to be raised to Rs 18,000 per month from current Rs 7,000 while the maximum pay, drawn by the Cabinet Secretary, has been fixed at Rs 2.5 lakh per month from current Rs 90,000. The secretaries’ panel may have recommended raising minimum entry level pay at Rs 23,500 a month and maximum salary of Rs 3.25 lakh. A fitment factor of 2.57 is being proposed to be applied uniformly for all employees and the rate of annual increment is being retained at 3 per cent.

The budget for the fiscal year 2016-17 has no explicit provision for implementation of the 7th Pay Commission recommendations, but it has been built in as interim allocation for different ministries. Around Rs 70,000 crore has been provisioned for this purpose. Considering that the recommended date of implementation is January 1, 2016, the government employees would also get a decent sum as arrears from January this year.

The Central Government employees and pensioners form the core of the salaried middle class and wooing them with a higher wage is a key move on the part of the Modi government. The additional purchasing power in the hands of this segment is also expected to provide a boost to the economy. This decision by the Central Government is expected to be emulated by the state governments, and this could have a net cascading effect.

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