The 7th Pay Commission is likely to raise the salaries of government employees by up to 40 per cent, said Neelkanth Mishra, India equity strategist of Credit Suisse. The Pay Commission will submit its recommendations in October and it will be implemented by next year.“As the Pay Commission numbers come through there could be a 30-40 per cent increase for each individual. It won’t be as big as last time because it was driven by a lot of arrears but definitely a large number of government employees will come into the pay bracket which can afford to have, for example, four-wheelers,” he said in an interview with NDTV.Credit Suisse says about one-third of India’s middle class is employed by the government and as the 7th Pay Commission comes through, there will be an improvement in discretionary spending.“In Tier 3, Tier 4 towns where government employees are 50-60 per cent of the middle class, it is very likely that real estate markets will take off again,” Mr Mishra said.Once the Pay Commission submits its recommendations in October, it will take 3-6 months for the Centre and the states to announce its implementation, Credit Suisse said.Gujarat and Madhya Pradesh have already indicated that they are going to implement the 7th Pay Commission recommendationsfrom January 1, 2016, he said.As clarity emerges on the 7th Pay Commission, consumption will see an uptick and that could act as a stimulus to the economy, the brokerage said.However, Mr Mishra struck a note of caution. “Clearly if you see a third or 35 per cent of your middle class getting a 40 per cent or 30 per cent jump in compensation in one shot, the fears of inflation will rise.” Expectations of rate cuts can get pushed out and some possible fiscal pressures can emerge, he warned.
- As per Pension fixation method stipulated in Office Memorandum No. 38/37/08-P&PW(A) dated 01.09.2008 and 03.10.2008 which were issued on implementation of 6th Pay Commission recommendations in respect of Pre-2006 Pensioners, revised penion was ensured to be fixed at 50% of the minimum of 6th CPC Pay Band corresponding to Pre-revised pay scale from which the pensioner had retired, if pre-revised pension (before 2006) multiplied by factor of 2.26 is less than the said 50% ensured pension. Like wise, revised family Pension was ensured to be fixed at 30% of the minimum of 6th CPC Pay Band corresponding to Pre-revised pay scale from which the pensioner had retired / deceased.
- As per fitment table given in these earlier instructions, several pre-revised pay scales were bunched in to a single 6th CPC Pay Band. This Grouping of several pre-revised pay scales and fixing same pension for retirees from these pay scales based on the minimum of pay in revised 6th CPC pay band created huge disparity in revisedpension of pensioner retired in a higher pay scale and those who retired in lower pay scale.
- After prolonging legal battle, govt agreed to follow, a revisedconcordance table which is based on fitment table of serving employees, in which higher pre-revised pay scales (that were bunched in to a particular Pay band) were equated with stepped up pay in 6th CPC pay band. However, date of effect of this order as per OM dated 28.01.2013, was given as 24.09.2012.
- Pre-2006 Pensioners continued their legal battle before Hon’ble High Court and Apex Court, for fixing date of effect of this order from 1st January 2006.
- After Hon’ble Supreme Court dismissed Department’s SLP and fixed deadline of 4 months for implementing original order of CAT in favour of Pensioners, Office Memorandum dated 30.07.2015 has been issued now by Department of Pension and Pensioners’ welfare for allowing revision of Pension for Pre-2006 Pensioners as per revisedconcordance table with effect from 1st January 2006.
