Mumbai: The implementation of the Sixth Pay Commission's recommendations will not have any effect on inflation as the central budget has already factored in the impact of higher wages on price levels in the budget, finance minister P Chidambaram said.

Both the general budget and the railway budget have taken into account the recommendations of the pay commission's recommendations and the burden on that score, he said, adding, the budget deficit targets would also be adhered to.

''It has been factored into when budget was prepared and prime minister's EAC and the RBI has also given their estimates,'' Chidambaram said.

He said the pay revision wold bring an additional burden of  Rs15,717 crore on the general budget and Rs6,414 crore on the railway budget for 2008-09. The implementation of the recommendations with retrospective effect would involve a one-time additional outgo of an estimated Rs18,060 crore.

The pay revision would benefit nearly five million government employees and would raise net pay scales for defence personnel by around 1.83 times.

The government, however, has made certain amendments to the report, submitted by Justice B N Srikrishna on 24 March. The panel had recommended an effective 28 per cent salary hike for central government employees, including armed personnel.

The review had been undertaken by a high-powered committee headed by cabinet secretary K M Chandrasekhar who looked into the anomalies in the recommendations for various sections of the government servants, including defence personnel.

The department of personnel, meanwhile, is expected to back the employees' view that the panel had erred in the calculation of the salary earned by employees in January 2006 and that the fixation of the new pay bands had led to a loss of 12 per cent for the staff.

This should result in higher wages than that recommended by the pay commission.

The pay commission had also recommended several changes like staggered timings for women, introduction of performance related incentives, forcing central para-military services to recruit personnel from ex-servicemen after they complete 17 years of service in the armed forces and cutting down the number of gazetted holidays from  nearly 17 days to just three.

Many economists, however, say the wage increases could derail the government's precarious finance and scuttle moves to reduce the fiscal deficit from the current 3.1 per cent to 2.5 per cent of the country's gross domestic product in fiscal 2008-09.

The budget deficit target for 2008-09 would rather exceed the current levels and add to the government's off-budget liabilities estimated at 5 per cent of GDP, they pot out.

The previous pay revision, undertaken nearly a decade back in 1997, had raised salaries for central government employees by nearly 40 per cent.

The recommendations may not be announced until the prime minister makes a speech on the Independence Day.