The Union Cabinet has approved the recommendations made by the Seventh Pay Commission.
One key recommendation of the commission is a 23.55 percent increase in salaries, allowances and pension of central government employees and pensioners. The approval would benefit over 4.8 million employees and 5.5 million pensioners.
The panel headed by Cabinet Secretary PK Sinha was set up to study the recommendations of the pay commission headed by Justice AK Mathur. The committee has submitted its report to the Finance Ministry.
The pay panel had in November last year recommended 14.27 per cent hike in basic pay at junior levels, the lowest in 70 years. But after considering the increase proposed in allowances, the hike in remunerations comes to 23.55%. The previous 6th Pay Commission had recommended a 20% hike, which the government doubled while implementing it in 2008.
Implementation of new pay scales recommended by the 7th Pay Commission is estimated to put an additional burden of Rs. 1.02 lakh crore on the exchequer annually or nearly 0.7 percent of GDP.
The date of implementation for the recommendations is January 1, 2016. The Cabinet will decide if the arrears for the six months have to be paid in one go or in installments.