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In what it could be a big disappointment for Central government employees and pensioners, the Seventh Pay Commission is expected to recommend a 15% hike in their salaries effective from 1 January 2016.

The expected hike will be much lower than the 35% recommended by the Sixth Pay commission in 2008. In July, an analyst at global financial services firm Credit Suisse had expected the panel to propose a 40% hike.

The Seventh Pay Commission, headed by Justice A K Mathur, will submit its recommendations to the finance minister on Thursday, sources close to the developments told NDTV.

In August, the Union Cabinet had extended the deadline for the pay panel to submit its recommendations by four months to 31 December.

The commission in unlikely to recommend any change to the retirement age of Central government employees.

The 7th Pay Commission's recommendations are keenly awaited by many companies in various industries, as the salary hike proposals are expected to boost consumption and lead to an increase in sales.

On the other hand, the recommendations will increase the government's annual salary expenditure and could result in pushing the consumer prices further up.

The Union Finance Ministry estimates the Central government's expenditure on employees' salaries to rise by nearly 16% to Rs 1.16 lakh crore in the financial year 2016-17 upon the implementation of the commission's recommendations.

Last month, the Finance Ministry had said the pay commission would take into consideration the government's fiscal problems while making recommendations on salary hikes to about 48 lakh Central government employees and 55 lakh pensioners.


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