The Cabinet today cleared recommendations of the 7th Pay Commission, which will benefit over one crore government employees and pensioners. The decision to this effect was taken in a meeting which was chaired by Prime Minister Narendra Modi, sources said.
Last November, the pay panel had recommended a 14.27-percent hike in basic pay at junior levels — the lowest in 70 years. The previous 6th Pay Commission had recommended a 20-percent hike, which the government doubled while implementing it in 2008.
The government in January had set up a high-powered panel under the Cabinet Secretary to process the recommendations of the 7th Pay Commission that will have a bearing on remuneration of nearly 50 lakh central government employees and 58 lakh pensioners.
The Commission had recommended a 23.55-percent overall hike in salaries, allowances and pension involving an additional burden of Rs 1.02 lakh crore, or nearly 0.7 percent of GDP. The entry-level pay has been recommended to be raised to Rs 18,000 per month, from the current Rs 7,000, while the maximum pay, drawn by the Cabinet Secretary, has been fixed at Rs 2.5 lakh per month from the current Rs 90,000.
While the Budget for 2016-17 did not provide an explicit provision for implementation of the 7th Pay Commission, the government had said the once-in-a-decade pay hike for government employees has been built in as interim allocation for different ministries. The raise though smaller than the past increases- will cost the government about Rs one lakh crore.
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Under the new scheme, the maximum salary for a government servant will be about Rs 2.5 lakh a month, that’s more than double the top-rung pay of Rs. 90,000 a month . The least a government officer can now be paid is Rs. 18,000 a month, more than double the current compensation of Rs. 7,000 offered to the most junior employees.
A Finance Ministry source, speaking on the condition of anonymity, said,
Government employees are traditionally known to invest pay comm benefits into few specific sectors like real estate. If they follow this tradition, the real estate sector hit by poor demand may turn out to be the biggest beneficiary.