7th Pay Commission: The central government employees have not been completely satisfied with the pay hike mandated by the 7th Central Pay Commission. Demands of increasing the fitment factor for basic pay under the pay panel have been raised by employee unions several times, without any action on the government's part in this direction. But there might be some good news for government staff expecting a pay hike quite soon.
A few days back, National Joint Council of Action (NJCA) chief Shiv Gopal Mishra stated that Modi government is seriously considering a pay hike for central government employees. While this might not mean an increase in fitment factor for basic pay under the 7th Pay Commission, speculations are that government might be planning to hike dearness allowance (DA) right before the 2019 General Elections.
The decision for a DA hike is expected to be taken up and finalised in the Union Cabinet by the end of this month. Going by the NJCA chief's statement, the government is keen to increase the salaries of central government employees. The only thing holding back a favourable decision in this regard is the pressure it will put on the exchequer.
The government has already announced several measures in Budget 2019 to benefit the unorganised sector and the troubled agricultural sector. A new pension scheme, by the name of Pradhan Mantri Shram Yogi Maandhan (PMSYM) scheme, has been announced for the informal sector workers, which will provide them with a monthly pension of Rs 3,000 after 60 years of age. The PM-Kisan Samman Nidhi (PM-Kisan) has also been launched to provide direct income support benefit of Rs 6,000 per year to small and marginalised farmers.
For these two schemes, the government has already sanctioned Rs 75,500 crore, Rs 75,000 crore for the PM-Kisan scheme and another Rs 500 crore for the PMSYM scheme. With the fiscal deficit situation already in a bleak state, the government might find it difficult to put a DA hike into effect due to financial pressures. Such a decision is also likely to give rise to inflationary trends, which might force RBI's hand to take a harsh stance with its policy rates.