Published On: Mon, Sep 24th, 2018

7th Pay Commission: Finance Ministry puts pay hike proposal on hold

New Delhi: The Finance Ministry has put on hold a proposal to increase pay for 10 million central government employees and pensioners beyond the recommendations of 7th Commission for the time being because the rupee has plunged to record lows, shedding more than 12 percent during the year.

FM Arun Jaitley should care about keeping his promise and will hike the pay of central government employees, a key vote bank for the ruling BJP in a looming general election 2019.

At present, the rupee is the worst performing Asian currency.

A weak currency is likely to widen India’s current account deficit further (CAD). A falling rupee versus the dollar increases the cost of imports and increases export revenues in rupee terms.

The current weakness in the rupee is mostly attributed to widening CAD, which is higher due to the crude oil import bill.

A senior Finance Ministry official told The Sen Times that the time is not ripe to enhance pay as oil import bill of the country rose over 50 percent in the first four months of this fiscal as against the same period last year. Currency weakness is likely to result in inflationary pressure as well.

“The Ministry is holding back the increase in pay for a while now and may reconsider this at a later stage before general elections,” the official said on condition of anonymity.

The central government hiked a 14 per cent salary of its employees and pensioners in 2016 on recommendations of the 7th Commission, which is the lowest in 70 years. While, the previous 6th Pay Commission had recommended a 20 per cent hike which the government doubled while implementing it in 2008.

As part of its proposal to enhance pay, conceived by National Anomaly Committee (NAC) in July, 2018, so, employees’ unions are pressing hard for hike in pay.

The NAC was formed in September, 2016 to resolve pay anomalies arising out of the implementation of the 7th Pay Commission’s recommendations.

“Based on the formula arrived on the report of NAC, for encouraging the lower level employees, fitment factor would be higher than 2.57, which has been recommended by the 7th Commission and minimum pay would be in the range of Rs 19,000-20,000 per month,” the official added.

Finance Minister Arun Jaitley promised to pay hike beyond the recommendations of 7th Commission on June 30, 2016 for central government employees and pensioners as part of a government Memorandum of Understanding (MOU) with central government employees unions.

Jaitley also reiterated his promise in Rajya Sabha on July 19, 2016.

“The government is facing huge economic shock in the form weak rupee versus the dollar. So FM promise is also a problem but Jaitley should care about keeping his promise and will hike the pay of central government employees, a key vote bank for the ruling BJP in a looming general election 2019,” the official told us.

The employees’ unions leaders said higher pay are essential. “Naturally, the government is facing an economic crisis and it will be hurt by hike in pay, but this is essential as the current minimum pay Rs 18,000 is not enough to live on. So low paid employees are financially incapable of handling families financial burden,” said an office-bearer of a central government employees union.

The central government employees unions observed ‘all-India protest day’ on September 19 to press for upward revision of minimum pay beyond the 7th Pay Commission’s recommendations and scrapping of of new pension scheme.


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