The bill giving effect to sixth pay commission’s recommendation to increase salaries of govt employees is likely to pass in Lok Sabha in coming session. The legislation is coming in the time when government is wishing to tighten up its public finances and widen the federal fiscal deficit. The decision to increase salaries of government employees will lead to heavy burden on state exchequer.

 

As has been reported the Cabinet had set up a team of top civil servants; they were vested with duty to examine the recommendations of the pay commission. The bill according to sources is likely to go before the cabinet today. However, strategically, it may not be announced until the PM makes a speech on the Independence Day national holiday on Friday.

 

Much needed raise in salaries of government employees will cost anywhere between 250-300 billion rupees for this fiscal year to government exchequer. On the other hand there have already been some uncomfortable voices where they have observed that budget deficit would exceed and serious fiscal risks may arise from growing off-budget liabilities which is estimated at 5 per cent of GDP.