Published On: Sat, Jan 9th, 2016

Despite Pay Commission award, Indian economy to keep up momentum

New Delhi: Indian economy will keep up its momentum fiscal year 2016-17 despite pressure on the budget from a salary hike for central government employees and additional expenditure for One Rank One Pension (OROP), the World Bank said.

The Seventh Pay Commission award

The Seventh Pay Commission award bill is about Rs 1,02,000 crore, according to the Finance Minister Arun Jaitley that can be afforded.

The World Bank report forecasts India will continue to be the bright spot of the global economy and is projected to grow at a robust 7.8% in fiscal 2016-17, more than a percentage point higher than China.

India, the dominant economy in Asia, is projected to grow by a robust 7.8% this year and 7.9% in the next two years.

On the other hand, the employees will spend their increased salary on consumption, which will also have a positive impact on GDP growth.

The Seventh Pay Commission Award will be introduced in April next financial year, while it will be made effective from January 1.

48 lakh central government employees will draw their salaries as per Seventh Pay Commission Award with arrears from April.

In addition, expenditure burden is expected to be around Rs 8,000 crore due to One Rank One Pension (OROP).

The 52 lakh pensioners will also get a hike 24% in in their pension from next this fiscal year.

The government will make effective only the hike in basic salaries from January; the allowances will be raised from the date of implementation.

The Seventh Pay Commission award that takes effect in January will increase the country’s total pay bill about Rs 1,02,000 crore, according to the Finance Minister Arun Jaitley that can be afforded.

The breakup total estimated increase of about Rs 1,02,000 crore would look like: the increase in salary would account for Rs 39,100 crore, allowances Rs 29,300 crore and pension at Rs 33,700 crore.

The Sixth Pay Commission’s recommendations were implemented in August 2008, with a retrospective effective date of January 1, 2006, which gave almost Rs 18,000 crore in the form of arrears to the central government employees.

The Seventh Pay Commission recommended a 14.27 per cent increase in basic pay, the lowest in 70 years. The previous Sixth Pay Commission had recommended a 20 per cent hike, which the government doubled while implementing it in 2008.

The Seventh pay commission recommended fixing the highest basic salary at Rs 250,000 and the lowest at Rs 18,000and its increased the pay gap between the minimum and maximum from existing 1:12 to 1: 13.8.


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