In a sop to its employees ahead of the elections, the government today announced constitution of the Seventh Pay Commission to revise salary and pension for about 80 lakh staff and pensioners.
The recommendations of the new Pay Commission, which will be constituted shortly, will be implemented from January 1, 2016.
"Prime Minister Manmohan Singh approved the constitution of the 7th Pay Commission. Its recommendations are likely to be implemented with effect from January 1, 2016", Finance Minister P Chidambaram said in a statement.
The Congress and the employees union hailed the decision of the UPA-II government.
The union, however, demanded that the pay panel's award be implemented with retrospective effect from January 1, 2011.
Commerce and Industry Minister Anand Sharma said: "It is the right of the employees to have Pay Commission ...When the recommendations come, the government will be able to implement (it). You do not do something for which you do not have money available."
The setting up of the Commission, whose recommendations will benefit about 50 lakh central government employees, including those in defence and railways, and about 30 lakh pensioners, comes ahead of the Assembly elections in 5 states including Delhi, Rajasthan and Madhya Pradesh in November and the general elections next year.
The government constitutes Pay Commission almost once in every ten years to revise the pay scales of its employees and often these are adopted by states after some modification.
As the Commission takes about two years to prepare its recommendations, the award of the seventh pay panel is likely to be implemented from January 1, 2016, Chidambaram said.
