Pay
Commissions, which are regularly constituted to review salaries of Central
government employees, give a fillip to the Indian economy, according to
analysts.
The sixth Pay
Commission partly offset the after-effects of the 2008 Lehman crisis on India
because of the 35% increase recommended.
The
implementation of the hike boosted two-wheeler and car sales and increased
demand in the cement sector, according to global brokerage firm Bank of America
Merrill Lynch.
Pay packages
of government employees rose by an average of 35% as per the recommendations of
6th Pay Commission. They also received arrears of more than 30 months due to
delay in the implementation.
"The
arrears resulted in robust demand for consumer discretionary products that
resulted in sustained stock performance over 3-5 years," Jai Shankar,
chief India economist of Religare, told NDTV
Profit.
Due to this
co-relation between Pay Commissions and economic growth, many analysts are
eagerly awaiting the 7th Pay Commission report.
The 7th Pay
Commission was appointed in February last year by the outgoing Congress-led UPA
government, is likely to submit its recommendations by August-end or latest by
October. The recommendations are likely to be implemented by the Central
government next year.
About 50 lakh
central government employees (including 15 lakh defence personnel) and more
than one crore state and local government employees will gain from the
recommendations to be made by 7th Pay Commission, according to Religare.
Besides, it
will also result in an upward revision of pension for about 30 lakh retired
Central government employees.
While there is
no consensus on the amount of salary hike likely to be recommended by the 7th
Pay Commission, analyst expects it to be in the range of 15 to 40%.
While Bank of
America estimates the salary raise to be at 15%, Religare puts it at 28 to 30%.
Credit Suisse expects a salary hike of 40%.
Economists see
the 7th Pay Commission as improving the economic activity in the country by
increasing consumption.
"The most
important factor is economic activity itself which is gaining pace and,
together with greater employment generation and policy reform, the 7th Pay
Commission salary hike may help India enter a larger virtuous cycle,"
said Religare.
"A 15 per
cent salary increase would push up the central government's salary bill by Rs
25,000 crore (or $4 billion), which is 0.2 per cent of India's GDP. This will
help in a consumption-driven recovery in the domestic economy," said
Indranil Sen Gupta of Bank of America Merrill Lynch.
Source :
http://www.ibtimes.co.in/
No comments:
Post a Comment