Nov 272015

7th Pay commission is a mixed bag

The 7th Pay commission has already been submitted to the government and has macro as well as micro effects. Unlike the previous scenarios the government has reworked on the recommendations and the increment in the pay scales would be more as proposed in the recommendation. This is surely a good news for all the current employees and also the retired ones. The perks and incentives will also be reworked before implementation.

For all the defence and civil employees the OROP will be implemented for getting equality between those who are already retired employees and others who would retire after January 1, 2016. This is the date by when the recommendations of the 7th Pay commission would be implemented.

The average increment in the pay scales is 23.5 % which is a decent figure though the hike given in the 6th Pay commission was 35% and even more. But according to the current economic scenario and the fiscal growth the hike proposed is fair enough.

Moreover, the basic salary component will also be appraised by 3% every year and the DA would also be appraised twice a year. Other allowances will be also be hiked by 63% on an average. For the highest group the HRA will be appraised by 122%.
A person who is designated as Cabinet secretary would be paid a salary of 2.2.5 lakhs along with other perks and allowances and it as good as being paid in the private sector.

The budget allotted for increments is more than one lakh crore for increments in the pay scale of both central and railways employees.

According to the finance minister this is just 0.65% of the total GDP. Whereas, the accumulated figure for implementing new pay scales for PSU, teachers and local bodies is around 1.5% of the GDP. According to RBI if more money is given to the employees then the consumption demand would boost and that is beneficial for the economy. Also an increment in the salaries and pensions of the government employees would reap benefits for the economy as the purchasing power increases. But there are equally inflations as well and hence every pay commission implements an inflation of double digits.

During the previous pay scale revisions by the commissions, there was a lot of delay in actually increasing the pays as a result of which government had to pay a lot of arrears. But this might not be the scenario for the 7th pay commission.

The 7th pay commission has simplified the pay structure of the government employees and this has nothing to do with the responsibilities and accountabilities involved. For the same the government should also appoint a commission as it might become complex. With these pay increments the common man can benefit and live a comfortable life.

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