In what could be a slight disappointment for Central government employees, the implementation of the Seventh Pay Commission recommendations may only happen in mid-2016, according to brokerage firm.
"There is no certainty it would happen even in the next six months," said Rakesh Arora, managing director and head of research, Macquarie India.
The implementation of the previous pay panel recommendations was delayed by 2.5-3 years, said Arora.
The Seventh Pay Commission, headed by Justice A K Mathur, recommended a 16% hike in basic salary and a 63% increase in allowances for government employees, taking the overall hike in salaries to 23.55%. The recommendations have to be cleared by the Cabinet to become effective from January 1, 2016.
"And still there is no guarantee that it is going to be implemented in the next six months, it is still for the government to really consider. So what we are saying is from the timing it can happen by middle of 2016 and not be pushed out too late," NDTV Profit quoted Arora, as saying.
The government's expenditure on salary payments to employees will go up by a whopping Rs 1 lakh crore upon the implementation of the commission's proposals.
The increase in the government's salary bill is expected to weigh on its efforts to bring down the country's fiscal deficit.
"A recommended 23.55% increase in remuneration for India's Central government employees, if fully implemented, would have a significant impact on the government's wage bill, and add to challenges the government faces in achieving fiscal consolidation targets," Fitch Ratings had said last month. "The government could seek to cut expenditures in other areas."
