Seventh Pay Commission Salary Hikes Likely To Be Absorbed By Next Budget, Says Report

New Delhi: Bulk of the impact of Seventh Pay Commission, under which salaries of central government employees will be hiked, is likely to be absorbed by the Budget of the next financial year, 2016-17, says a DBS report.

Seventh Central Pay Commission Chairman Justice Ashok Kumar Mathur

The global financial services major said pay and allowances could rise by 16 per cent following the rollout of the Seventh Pay Commission.

“If adopted, bulk of the impact (of the Seventh Pay Commission) will be absorbed by the next budget,” the DBS report said, adding that “historically, the pay commission’s rollout has been negative for fiscal balances.”

As per DBS, the increase in bonus payments and paya nd allowances would cumulatively imply a first-round increase in spending to the tune of 0.2-0.3 per cent of GDP in Financial year 2016-17, “putting deficit targets at risk”.

“These higher spending needs will require the government to either re-channel fiscal savings, restrain spending elsewhere or renege on the fiscal deficit targets,” it added.

The Seventh Pay Commission, set up by the government to revise remuneration of about 48 lakh central government employees and 55 lakh pensioners, will submit its report shortly.

DBS said that the full impact would get clearer when the pay commission tables its recommendations later this year.

The recommendations of the Seventh Pay Commission are scheduled to come into effect from January 1, 2016.

The previous Sixth Pay Commission was rolled out in the third quarter of 2008, at a time when the economy was reeling under the impact of the global financial crisis.

The Central government constitutes the Pay Commission almost every 10 years to revise the pay scale of central government employees and often these are adopted by states after some modifications.

News:- TST