A year after the government implemented the recommendations of the 7th Pay Commission, the 4.8-odd million central staff are hoping that the government this year considers their demand for a hike in minimum basic pay from Rs18,000 to Rs26,000.
The government had hiked the basic minimum pay from Rs7,000 to Rs18,000 following the implementation of Seventh Pay Commission's recommendations, based on a fitment factor of 2.57 with effect from 1 January 2016.
However, employee unions have demanded that the fitment factor be increased to 3.7 so as to ensure that the basic pay is hiked to Rs26,000 per month. While the government also recommended a hike in the minimum pay, it has been delaying the matter for a long time now.
Media reports in September last year had also suggested that the government was considering increasing the minimum basic pay from Rs18,000 to Rs21,000.
Later reports citing finance ministry sources, however, said the ministry has no plans to revise the minimum basic pay for central government employees in view of the impact it would have on an already buoyant inflation.
The Narendra Modi-led cabinet approved the recommendations of the Seventh Pay Commission on house rent allowance (HRA) and other allowances for central government employees on 28 June last year. The pay commission's recommendations were cleared with 34 modifications.
However, the pay hike following the implementation of the 7th Pay Commission report, which combined with rising oil prices and GST effect will have an impact on inflation.
Already, the house rent allowance for employees has been adjusted upward by the government.
In the previous monetary policy review that held in October, the RBI had projected the inflation to be in the range of 4.2-4.6 per cent for October-March (second half) period of this fiscal.
The implementation of new pay scales recommended by the 7th Pay Commission is estimated to put an additional burden of Rs1,02,00 crore, or 0.7 per cent of GDP, on the exchequer in 2016-17.
The Rajya Sabha was informed that the implementation of the 7th Pay Commission report however, would be after approval of the cabinet on completion of screening of suggestions by a high-level panel of secretaries.
In a written reply, minister of state for finance Jayant Sinha also said that the announcement of dearness allowance has no impact on the recommendations of the Pay Commission. He further said that the burden on pay head would increase by Rs39,100 crore to about Rs2,83,000 crore in the current fiscal. He also said, without the 7th Pay Commission recommendations, the outgo would have been Rs2,44,000 crore.