The 7th Pay Commission suggests 23% raise in government employees’ salary, OROP for all in Rs 1 lakh cr pay revision. At last Achhe din arrived for the government employees.

The Seventh Pay Commission headed by Justice AK Mathur has on Thursday submitted its report to Finance Minister Arun Jaitley, suggesting 23.55% hike in pay and allowances of government employees. The hike will benefit 47 lakh serving employees of the Central government and 52 lakh pensioners.

The recommendations, which is to be implemented from January 2016, are expected to dent the finances of both the Centre and, subsequently, state governments, who will follow suit and may force the pruning of development expenses. But the Finance Secretary Ratan Watal said that the government can “handle” financial implications of the recommendations and will work out modalities for implementation of the suggestions.

“The total financial impact in the FY 2016-17 is likely to be Rs 1,02,100 crore, over the expenditure as per the ‘Business As Usual’ scenario. Of this, the increase in pay would be Rs 39,100 crore, and increase in allowances would be Rs 29,300 crore and an increase in the pension would be Rs 33,700 crore,” the report said.

The implementation of the seventh Pay Commission report is expected to boost the consumption-driven recovery in the domestic economy, analysts forecast. The sharp hike in salaries of central government employees will trigger the demand for affordable homes and consumer durables such as cars, two-wheelers and other electronic items.

Economists foresee that the move will have budgetary implications, but it will act as a stimulus. “The development will boost economic growth and have dynamic impact. If monsoon remains normal next year, then it will boost and create conditions for revival of private consumption,” D K Joshi, chief economist, Crisil, said.

"The seventh Central Pay Commission report should result in a large consumption stimulus for the economy in FY2017-18... We expect automobiles, consumer durables and real estate sectors to benefit from the largesse," said Sanjeev Prasad of Kotak Institutional Equities.

"The sharp increase in government expenditure on central government employees' pay, allowance and pension will effectively rule out any meaningful fiscal consolidation in FY17," Kotak said.

So, at last Ache din is going to come for government employee and trigger ache din in the Indian economy.

By Premji