Effectively a increase in the pay and allowances for central government employees is likely boost to consumption demand as it will boost GDP during the current fiscal but its impact is expected to persist up to 24 months,” RBI Governor Raghuram Rajan said.
As of today, the 7th Pay Commission recommended minimum pay to Rs 18,000 per month from Rs 7,000 for central government employees.
Already relatively very low pay by international standards, this will make the India’s low-pay threshold “one of the lowest” minimum pay, according to all the countries in the world, say the Financial experts.
Analysis by the 7th Pay Commission revealed that low paid employees will suffer the biggest financial hit. With the new changes affecting 48 lakh central government employees and 52 lakh Pensioners, while the central government claims the government will have to burden of an additional annual fund of Rs 1.02 lakh crore on exchequer.
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