Delay salary hikes, 5 states tell Centre

On 25 September 2013, it was announced by the finance minister P Chidambaram that the formulation of the 7th Pay Commission had been approved by the Prime Minister Manmohan Singh.

The recommendations of the commission would be implemented from 1 January 2016.

On 4 February 2014, it was announced that the Seventh Pay Commission would be headed by Justice A.K Mathur.

Analysts claim that the 7th Pay Commissions which had been constituted to review salaries of Central government employees will give a boost to India's economy.

An increased consumption spurred by the improving the economic activity will be a direct result of 7th Pay Commission's recommendations.

Analysts have predicted a 0.2% growth in India's GDP after the salary hike .

Neelkanth Mishra, India equity strategist of Credit Suisse said that the 7th Pay-Commission in all probability "raise the salaries of government employees by up to 40%".

The Pay-Commission will be submitting its recommendations in October, which will then take 3-6 months for its implementation by the Centre and the states.

Gujarat and Madhya Pradesh have already announced to implement it by 1 January 2016.

The 7th Pay Commission is not looking to lower the age of retirement from 60 to 58.

Studies had reflected that older employees suffer a "decline of cognitive and physical abilities" and find it harder to adapt to newer technology.

However, the Pay Commission said that lowering the retirement age would lead to a greater burden on government coffers as the pensioners would increase.

The Seventh Pay Commission asked the government to formulate a 'permanent pay panel' for giving recommendations on issues pay structure pertaining issues of central government employees.

This permanent pay panel would be useful in implementing consistent salary hikes keeping stride with the rate of inflation.

This will reduce the need for another pay commission in coming years.

The 7th Central Pay Commission which was set to expire on 27 August got a four-month extension from the Union Cabinet.

A request had been made by the Pay Commission for the extension up to December 31, 2015.

The extension was sought in "view of its volume of work and intensive stake-holders' consultations".

The commission is in the last round of finalising its recommendations.

The 7th Pay Commission, after concluding its final round of discussions, is set to submit its report to Finance Minister Arun Jaitley on 19 November.

According to sources, a 15% salary hike for Central government employees is likely to be announced.

The salary hike is expected to boost the consumption-driven recovery in India's economy, while also increasing fiscal and inflationary pressures.

The 7th Pay Commission led by Justice AK Mathur submitted its report to FM.

Basic allowance of 47 lakh serving government employees was increased by 63% and their basic salary would rise by 16%.

There was an overall 23.55% hike in salaries. 24% pension raise planned for 52 lakh retired employees.

The least salary for central government workers was fixed at Rs.18,000 per month.

5 fiscally-stressed states -West Bengal, Tamil Nadu, Punjab, UP and Odisha have requested the Centre for extra time to implement the recommendations of 7th Pay Commission.

The states approached the Prime Minister's Office, Cabinet Secretary and Niti Aayog claiming that they needed time to absorb the pay hikes.

In November 2015, the commission had recommended a 23.55% overall hike effective from 1 January 2016.