Sources have stated that union Cabinet on Wednesday has hiked salaries and pensions of nearly one crore Central government employees and pensioners by 23.5% as recommended by the 7th Central Pay Commission in November and the new wages will be applicable with retrospective effect from January 1, 2016.
It is stated that the increase in both salary and pension is 2.57 times more over the 6th Pay Commission and the Cabinet has also improvised on the recommended salaries to defense personnel to give a hike of 2.67 times as against 2.57 times to the civilians.
The Finance Minister Arun Jaitley has said the government employees would now be getting more than double the salaries in the private sector and the lowest helper in the government will get Rs 22,579 per month as against Rs 8,000-9,500 per month in private sector.
He has also added that the idea behind hike in emoluments is to increase consumer spending to trigger economic growth. He, however, didn't rule out its cascading effect on inflation and experts also believe that additional cash was a double-edged whammy, as it could also fuel inflation, affecting poor.
