The Union Cabinet has approved recommendations by a pay panel on increasing salaries and pension for one crore central government employees and pensioners by at least 23.55%. This implies an annual additional burden of ₹1.02 lakh crore on the exchequer or nearly 0.7% of the GDP.
The government has largely accepted the pay and pension recommendations of the appointed panel, which takes effect from January 2016, finance minister Arun Jaitley said in a press conference. The minimum pay has been upped by 2.57 times to ₹18,000. It will ensure larger savings, in turn helping the government save ₹23,900 crore, he added.
The changes will be executed from January 1, 2016, meaning a retrospective implementation. Of the total ₹1.02 lakh crore cost, pay increase will cost ₹39,100 crore, increase in allowances will be ₹29,300 crore and pensions will cost ₹33,700 crore. ₹73,650 crore will be allocated from the general budget and ₹28,450 crore from the railway budget.
The pay panel, headed by Cabinet secretary PK Sinha, was appointed to study the recommendations of the pay commission headed by Justice AK Mathur. The committee had subsequently forwarded its report to the finance ministry, which was taken by for discussion this morning.
The highest pay will be ₹2,25,000 per month. Cabinet secretaries and others at the same pay level will receive ₹2,50,000 per month. This is more than double the current pay, which is pegged at ₹90,000 per month.
The government is expected to release a statement on the same. Finance minister Arun Jaitley, however, has tweeted this:
Congratulations to central government officers, employees & pensioners on a historic rise in their salary & allowances through the 7th CPC.
— Arun Jaitley (@arunjaitley) June 29, 2016