7th pay commission: News about what may affect the future salaries of central government employees is ebbing and flowing fast. A huge number of things can impact the issue one way or the other. The biggest concern of policy makers is that there may be negative reaction in the wider economy as a result of any big pay hike for staff. It will also leave the treasury depleted. Considering that the outgo will be massive and that too for the long term, the decision becomes that much more fraught. 

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

But first, the issue. It is the demand of central government employees that their salaries be raised by a fitment factor of 3.68 times that would boost the salaries at the lowest level to Rs 26,000 and would consequently have a big impact as we go higher up along the hierarchy. The danger stems from the fact that any hike in pay will drive up inflation. While price hike has been controlled to a large extent, it has emerged that the rate of inflation in India has been much higher than the global rate. This was indicated by a government source.

The government at the Centre in general and the RBI in particular have to watch out for inflation. It has to be kept in control and that means any large group, and here we are talking about almost 50 lakh employees and almost a similar number of pensioners, getting a big hike and that money will be spent in the market to a large extent and that will drive inflation. Notably, RBI had flagged the issue of just the housing rent allowance (HRA) post the initial implementation of the 7th pay commission as having impacted overall inflation!

Now, the concern has deepened. And with general elections around the corner, the government itself would be hard pressed to go forward with any such initiative that may lead to price rise affecting the rest of the country, especially the common man. There is nothing worse than high inflation for a government in power in a poll year. Seventh pay commission pay hike will take a backseat to this. 

Watch this Zee Business video

So, ultimately, it is the government that will weigh all the pros and cons of the issue and then go ahead and take a stand. Notably, a number of state governments have cleared the 7th pay commission report recommendations for its employees and PM Narendra Modi led government itself has granted its benefits to certain protesting groups, namely the Gramin Dak sevaks. All of that is lending momentum that may force a decision in favour of central government employees. But nothing is being officially mulled at the moment.