The 7th Pay Commission that decides on government salaries, has now enabled salaries and allowances to rise by at least 23.5 percent.
The hike is expected to cost the taxpayer an additional Rs.1 lakh crore annually, or nearly 0.7 percent of the GDP, and the move will impact nearly 50 lakh employees and 58 lakh pensioners. The changes will be effective retrospectively from January 1 this year.
The move has led to discontent among the lawmakers who allege disparity with government officers. To address their resentment the government is considering a hike in salaries and allowances of lawmakers.
Sources say Finance Minister Arun Jaitley has made provisions for the payout.
While some say the additional cash in the market may fuel an inflationary trend, experts say the impact of the pay hike may become a turning point for PM Narendra Modi’s government to trigger demand that drives growth investment and profits.