7th pay commission: Hike in minimum basic pay will not happen due to inflation?

In another setback for 50 lakh government employees under the seventh pay commission, experts now belive that the expectations minimum pay hike before 2019 polls won't happen due to the increased inflation. An RBI research earlier pointed out that due to an revised HRAs the inflation expanded in the country. 

A research paper by the Reserve Bank of India has found that the revised House Rent Allownce (HRA) under the seventh pay commission has impacted the CPI inflation by nearly 35 basis points at its peak. The research was conducted by the monetary policy department of the central bank. The latest study might shattered all hopes of hike in minimum basic salary under 7 CPC of around 50 lakh central government employees. 

"Ex-post analysis of CPI shows that the 7th CPC's HRA increase pushed up headline inflation prints gradually from July 2017, with a peak impact of about 35 bps," the research paper titled 'Impact of Increase in House Rent Allowance on CPI Inflation' said.

Earlier it was widely expected that the hike would come before the general elections of 2019. However, it is also to be noted that minister of State for Finance, P. Radhakrishnan, had said that currently the government has no plans to increase the minimum salary beyond the seventh pay recommendations. 

At present, the Central government employees are getting basic pay according to the fitment formula of 2.57 of the basic pay. Fitment factor is a figure used by 7th CPC with which the basic pay in 6th CPC regime (i.e Pay in Pay band + Grade pay) is multiplied in order to fix basic pay in revised pay structure (i.e 7th CPC).

However, the employees were demanding to raise the minimum basic pay to Rs 26,000 instead of Rs 18,000, the amount seventh pay commission recommended. But now, a section of media was reporting that despite the government's statement, the news related to the hike in salary might come before the 2019 general elections. 

Prime Minister Narendra Modi during his aggressive campaign before the Tripura polls had said that the state employees would get seventh pay commission benefits when BJP would come to power. 

PM Modi said, "the BJP government was committed to implementing seventh pay commission scales  in the state if the party comes to power". Now, taking cues from the earlier incident, employees were hoping that the government might announce the good news before the general elections next year. 

After Minister of State for Finance P. Radhakrishnan’s in Lok Sabha clarified that the PM Narendra Modi government is not considering any minimum pay hike beyond the recommendations of the seventh pay commission, the employees' associations reportedly were planning to go on a strike, according to a report in the Sen Times.