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7th Pay Commission: Will the driving of a revenue deficit stall a salary hike?


Some good news on the 7th Pay Commission is expected in April. The Union Finance Ministry has been considering a salary hike beyond the recommendations of the pay panel.

7th Pay Commission: Will the driving of a revenue deficit stall a salary hike?

The hike is expected to come into force in April and would be rolled out without arrears, sources have indicated. While many sections have claimed that a hike would be rolled out from April itself, there however is one hitch.

Both Maharashtra and Tamil Nadu have said that after clearing the recommendations of the 7th Pay Commission, there has been financial trouble. It has driven revenue deficits, the two governments have said.

Revenue deficits are clearly harmful for the economy and in such a scenario, the Finance Ministry headed by Arun Jaitley seems to be in a dilemma. If the implementation of a salary hike would drive revenue deficits, then the government is unlikely to take that road and a salary hike may well be put on hold.

However sources say that there is nothing final as yet and the matter is under consideration. A date of announcement is not known as yet. However in case a hike is announced then it would be effective April 2018.

In case a hike comes into effect, then the government will raise the fitment factor to 3.00 for officials under the pay matrix level 1 to 5. This would

increase the minimum basic pay to Rs 21,000. Presently, the minimum basic pay for central government employees has been kept at Rs 18,000.

The last pay panel had recommended 2.7 per cent increase in basic pay of central government employees under the 7th Pay Commission, which increased their minimum basic pay from Rs 7,000 to Rs 18,000. But the central government officials have been demanding fitment at 3.68 times and Rs 26,000 minimum basic pay.

Finance Minister Arun Jaitley is looking to increase minimum pay to Rs 21,000 and fitment factor to 3.00 for low-level empoleyees, reports say. Finance Ministry may present the proposal before the Cabinet in April, the reports added.

On June 30, 2016, a day after the Cabinet cleared the 7th Pay Commission recommendations, FM Arun Jaitley had assured central government employees unions that their demand of raising minimum pay would be considered.

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