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Announcement Keeping an eye on the forthcoming elections central government of India announced the acceptance of the recommendations of the Sixth Central Pay Commission. Government had also made some changes on the suggestions of the Committee of Secretaries. With it pay of 50 lakh central employees will increase at least 21 per cent.

Decisions According to the decision of the government the revised pay scales will be effective from January 1, 2006. The arrears of 32 months that would cost Rs. 29,373 crore would be paid to the employees in two installments to save the exchequer from this sudden financial load. The first installment of 40 per cent will be paid in the current fiscal year and the remaining 60 per cent will be given in the year of 2009-10. It will put additional burden of Rs. 15,700 crore on the Union budget and Rs. 6,400 crore on the Railway budget. The other important decision of the government is to give at least three promotions to all the defense and civil employees under the Assured Career Progression scheme. Civil employees will get these promotions after the 10, 20 and 30 years of service and the defense personal will get it after the service of 8, 16 and 24 years.

Pay Hikes Cabinet has also passed the decision of doubling the Military Service Pay. A hike of 2.5 to 3 per cent has also been announced in the rate of annual increment. As per the recommendations of the commission minimum basic pay of a lowest level employee has been increased form 6,660 to 7000. And this lowest level employee will get Rs. 10,000 a month that will include all the allowances. Except it government has also announced separate pay scales for some highly ranked employees.

Employees and Analysts On the other hand employees unions as well as  armed forces are not happy with the government decision as they were expecting over 40 per cent hike one average except allowances.

But analysts have expressed their concerns additional burden will lead to more government borrowing and state governments too will follow it that will affect India’s investment grade credit rating. It will also affect the inflation that has already crossed the 12 per cent mark.