7th Pay Commission may raise salaries of Central Government Employees up to 40% – NDTV

7th Pay Commission may raise salaries of Central Government Employees up to 40% – Credit Suisse’s Interview in NDTV indicates increase in consumption which could act as a stimulant for Economy

The 7th Pay Commission is likely to raise the salaries of government employees by up to 40 per cent, said Neelkanth Mishra, India equity strategist of Credit Suisse. The Pay Commission will submit its recommendations in October and it will be implemented by next year.

“As the Pay Commission numbers come through there could be a 30-40 per cent increase for each  individual. It won’t be as big as last time because it was driven by a lot of arrears but definitely a large number of government employees will come into the pay bracket which can afford to have, for example,  four-wheelers,” he said in an interview with NDTV.

Credit Suisse says about one-third of India’s middle class is employed by the government and as the 7th Pay Commission comes through, there will be an improvement in discretionary spending.

“In Tier 3, Tier 4 towns where government employees are 50-60 per cent of the middle class, it is very likely that real estate markets will take off again,” Mr Mishra said.

Once the Pay Commission submits its recommendations in October, it will take 3-6 months for the Centre and the states to announce its implementation, Credit Suisse said.

Gujarat and Madhya Pradesh have already indicated that they are going to implement the 7th Pay Commission recommendations from January 1, 2016, he said.

As clarity emerges on the 7th Pay Commission, consumption will see an uptick and that could act as a stimulus to the economy, the brokerage said.

However, Mr Mishra struck a note of caution. “Clearly if you see a third or 35 per cent of your middle class getting a 40 per cent or 30 per cent jump in compensation in one shot, the fears of inflation will rise.” Expectations of rate cuts can get pushed out and some possible fiscal pressures can emerge, he warned.

Source: NDTV

2 Comments

  1. Serving central government employees expected to get 40% more in the pay and what about it is silent retired employees. The news floated about serving employees only. The same % of pay rise is to be raised to retired employees, since the business man will not reduce the cost of commodity to retired employees.

  2. Yes, there is no news for retired employees who are in large numbers. The same fixation should be extended to retired employees and also increase in pension once they attain 65,70,75 years of age at least at the rate of 20%, 30% like that and so on.

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