Union Cabinet has approved sharp increase in salaries and pensions for around 1 Crore Government employees. The 7th pay commission for government employees has approved an average 23.55% hike in salaries, allowances and pensions of 4.8 million staffers and 5.5 million pensioners and 14.27% hike in basic pay at junior levels.
This salary hike will be effective from January 1, 2016. With more cash in hand, it is likely to boost the status of Indian Middle-class families. More demand could boost economy by spending more on assets such as cars and housing.
At the same time, extra money could also blow a bigger hole in public finances and push inflation up. As always, a coin has both sides. A secretariat has also been set up within the finance ministry to oversee the panel’s recommendations.
Inflation may also rice sheepishly at every service. In short, it is going to benefit directly as well as indirectly. One Crore employees can now put a smile on their faces.
