Central government employees and pensioners are likely to be disappointed as the 7th Pay Commission is expected to propose an approximate 15 per cent hike in salaries starting January 1, 2016, sources told NDTV.
The recommendation, which will become effective after a Cabinet nod, will impact 50 lakh central government employees and 54 lakh pensioners.
The 15 per cent salary hike likely to be recommended by the 7th Pay Commission will be much lower than the 35 per cent hike employees got on implementation of the 6th Pay Commission in 2008.
A 15 per cent salary increase would push up the central government's salary bill by Rs 25,000 crore, which is 0.2 per cent of India's GDP, according to Bank of America Merrill Lynch estimates.
Economists expect the wage hikes to boost the consumption-driven recovery in the domestic economy. Sales of affordable homes and consumer durables such as cars, two-wheelers and other electronic items are likely to pick up, analysts say.
On the flip side, salary hikes are also expected to stoke inflation and fiscal pressures, economists say.
According to sources, the recommendations of the 7th Pay Commission will be submitted to the finance minister on Thursday. The 7th Pay Commission is unlikely to suggest changes in the retirement age of central government employees, sources said.
Pay Commissions are meant to review the salary structure of central government employees and are set up every 10 years.