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The 7th Pay Commission report will be effective from January 1, and the Cabinet will decide if the arrears for the six months have to be paid in one go or in installments.
The Union Cabinet today approved the recommendations made by the 7th Pay Commission.
The approval, which will be made public soon, is likely to see a higher increase in the basic pay than the nearly 15 per cent recommended by the 7th Pay Commission for over 1 crore government employees and pensioners.
The pay panel had in November last year recommended 14.27 per cent hike in basic pay at junior levels, the lowest in 70 years. The previous 6th Pay Commission had recommended a 20 per cent hike which the government doubled while implementing it in 2008.
After considering the increase proposed in allowances, the hike in remunerations comes to 23.55 per cent.
The hike – the lowest in the last 70 years – is expected to cost the taxpayer an additional Rs. 1 lakh crore annually, or nearly 0.7 per cent of GDP.
Rs. 73,650 crore of the total payout will come from the general budget, while Rs. 28,450 crore will come from the railways.
The 7th Pay Commission report will be effective from January 1 2016 and the Cabinet will decide if the arrears for the six months have to be paid in one go or in installments.