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Seventh Pay Commission Acceptance & Its Impacts 2016

Indian Government Announced the much awaited Seventh Pay Commission Acceptance with a 2.57 times increase in the Basic Pay, thereby raising the pay of the lowest cadre from Rs 7,000 to Rs 18,000 PM and that of the highest cadre from Rs 1,97,100 to Rs 2,50,000 PM. The Pay & Allowances are to be effective from 01 Jan 2016.
The Government has also raised Gratuity Amount from Rs 10 to 20 lakhs and House Building Advance Amount from 7.5 lakhs to 25 lakhs. The House Rent Allowance has also been raised substantially.

As for the Allowances, the Government has referred its finalization to a Select Committee as there are 196 existing Allowances. The Pay Commission had recommended Abolishing 51 of them and Subsuming 37 Allowances. The Select Committee will submit their report within 4 months. But the Present Allowances are to continue until finalization of the new Allowances.
Ex-Gratia Grant for the Next of Kin for Civilians and Defence personnel has also been raised from Rs 10 to 20 lakhs and from Rs 25 to 45 lakhs respectively.

The Beneficiaries

Impact on the Economy

Impact on the Market

The 7th Pay Commission Announcement has been very timely and the Indian Market has received the Government’s Announcement very positively.

This Announcement combined with the Home Loan interest rate reduction and the existing property prices will indeed be a huge boost to the Auto, Consumer Durable and the Realty Sector demand and in turn contribute substantially to the Country’s GDP Growth.