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A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
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Thursday, June 30, 2016
Millions of public sector workers get pay, pension rise
India
on Wednesday approved an increase of at least 14.29 percent in salaries
and pensions for about 10 million government employees and pensioners, a
move that is expected to boost consumer demand and underpin economic
growth.
While the one-off hike is in line with the recommendations of a
government-appointed panel, it is smaller than previous increases,
including a nearly 40-percent rise in 2008.
The changes include lifting wages for the lowest paid to 18,000 rupees ($267) per month from 7,000 rupees.
After the cabinet meeting, Finance Minister Arun Jaitley said the
revisions will take retroactive effect from Jan. 1, 2016 and would cost
the exchequer nearly $17 billion in the fiscal year to end-March 2017.
"The inevitable consequence of this would be a pressure on the budget,"
he told reporters. "(But) I have already provided for it in this year's
budget estimates. Therefore, the amount doesn't come to us as a
surprise."
The decade by decade pay hikes, a populist wage policy that dates back
to India's independence from British rule, is in addition to half-yearly
and annual increments linked to prices.
Fitch's India Ratings & Research chief economist Devendra Pant
estimates the cumulative impact will be 0.63 percent of GDP, a fillip
for Asia's third-largest economy that is saddled with idle capacity.
"A rise in demand is likely to not only increase capacity utilisation
but may also help revive the investment cycle earlier than expected,"
Pant said.
But for an economy primarily running on consumer spending, the hike is
also potentially inflationary. The Reserve Bank of India has already
flagged the risks that increases in wages and pensions pose for its 5
percent inflation target.
"It is a mixed bag," Jaitley said.
(Additional reporting by Nigam Prusty; Editing by Douglas Busvine and Louise Ireland)
