7th Pay Commission report is likely to be submitted by August-end or in October, according to media reports-NDTV
The 6th Pay Commission played a key role in insulating the Indian economy from the shocks of the Lehman crisis of 2008. According to Bank of America Merrill Lynch, higher salaries – resulting from the implementation of the 6th Pay Commission – drove two-wheeler and car sales, and led to a recovery in cement demand.
Salaries of government employees went up by an average of 35 per cent on the back of the 6th Pay Commission recommendations; employees also got arrears for more than 30 months because of the delayed implementation of the 6th Pay Commission in October 2008.
“The arrears resulted in robust demand for consumer discretionary products that resulted in sustained stock performance over 3-5 years,” wrote Jai Shankar, chief India economist of Religare.
It is for these economic linkages that the 7th Pay Commission report is being eyed by analysts. The 7th Pay Commission report is likely to be submitted by August-end or in October, according to media reports.
Pay Commissions are meant to review the salary structure of central government employees and are set up every 10 years. The 7th Pay Commission will revise salaries effective January 1, 2016.
According to Religare, nearly 50 lakh central government employees (including 15 lakh defence personnel) and over 1 crore state and local government employees will benefit from the 7th Pay Commission.
There’s no consensus about how much salaries will go up — Bank of America expects a modest 15 per cent increase, while Religare expects salaries to go up by 28-30 per cent. Credit Suisse says salary hikes can be as high as 40 per cent.
Economists, however, agree that the 7th Pay Commission will help kick-start the domestic economy, which continues to be plagued by weak demand and excess capacity.
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