The Seventh Pay Commission is likely to recommend a net increase of 22 per cent over the current pay package of Central government employees with a 15 per cent raise in basic pay and up to 25 per cent jump in allowances.
“The net increase is likely to be in the range of 22 per cent after subsuming the current 119 per cent dearness allowance in the new basic and grade pay scale,” sources said. They said the net figure would provide the government the leeway to add another 5-7 per cent increase — as was done on the last two Pay Commission recommendations — to take the eventual raise to nearly 30 per cent.
The final figure, however, could be a tad below the 35 per cent hike employees got on implementation of the Sixth Pay Commission in 2008. “That time the situation was different. There was buoyancy in revenue collections. Now revenue receipts have become stagnant,” an official said.
The recommendation, which will become effective after a Cabinet nod, will impact 50 lakh Central government employees and 54 lakh pensioners. Sources said they expected the entire approval process to take another four months, at least, with the likelihood of its implementation by June next year.
However, since the hike in salaries is effective from January 2016, the arrears until June could be hived off as employees’ savings into the pension fund. “The Controller General of Accounts is already considering options for investment of Seventh Pay Commission arrears,” said an official.
Sources said the Pay Commission was expected to submit the recommendations on Thursday. The Commission was unlikely to tinker with the current retirement age of 60 years, they said. Pay Commissions are meant to review the salary structure of Central government employees and are set up every 10 years. The wage revisions of Central Government employees often trigger off similar demands in states.