7th Pay Commission: Big Salary Hike for Government Employees

7th Pay Commission 2016-17: What is benefit of 7th Pay Commission in private sector?

Pay commission is an organisation set up by the Indian Government that works on defining the salary structures of all the employees who are centrally commissioned.

The 7th pay commission for the first time was initiated and approved by the previous government headed by Prime Minister Dr. Manmohan Singh in coordination with the then Finance Minister P.Chidambaram dated September 25,2013.

Finally, the Cabinet ministry approved this recommendation on June 29th, 2016 which will be in effect from January 1, 2016. As per the commission, 23.55% will be the hike that will be given to all the beneficiaries which will include their pay and allowances.

7th Pay Commission will bring cheers to all the working and retired officers employed with the central government, most of which include the defence personnel.

There are 47 lakh central government employees, 53 lakh pensioners who are going to be benefitted from this commission. Also, the six months arrears from January 1st to June 30th 2016 will be paid off.

A look at the numbers

  • Rise in salaries and pensions by a factor of 2.57 which includes clubbing up of DA (Dear Allowance) in salary.
  • Actual increase in salary – 3 to 25% (The annual increment of 3% in the salary will also continue)
  • Lowest salary to be paid rises to Rs 18000 from Rs 7000 a month.
  • Cabinet Secretary’s salary revised to Rs 2.5 lakh from Rs 90,000 per month.

What are the benefits?

Hike in salaries will have a positive impact in the short to medium term on the economic growth and in terms of boosting demand.

  1. Boost in demand: Auto Mobiles, FMCG (Fast Moving Consumer Goods), housing and Consumer durables sales will get a boost.
  2. An increase in savings: Increase in salaries means increase in the savings that will lead to lower interest rates.
  3. The beneficiary – Stock Market will have Twin benefits of
  • Higher demand
  • Bigger financial savings
  1. A better Economy: Higher demand and a better monsoon are enough to lift up the Indian Economy.
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