Pay commission is set up intermittently by government of India and gives its recommendations regarding changes in salary structure of its employees. Since India’s Independence, seven pay commissions have been set up on a regular basis to review and make recommendations on the work and pay structure of all Civil and Military division of the Government of India. The recommendations are made while keeping in view the economic conditions in the country. The commission, set up once in every 10 years to review pay, allowances and other benefits for central government employees, was appointed by the previous government on 28 Feb 2014 and was asked to submit its report in 18 months. On September 25, 2013 the former finance minister P Chidambaram announced that the former Prime Minister Manmohan Singh had approved the constitution of the 7th Pay Commission which implemented with effect from January 1, 2016. Justice A. K. Mathur was supposed to be heading the Seventh Pay Commission, announcement of which was done on 4 Feb,2014. The full implementation of the 7th Pay Commission’s recommendations will bring an average 23.5 raise in their income for about one crore central govt employees and pensioners. With more money in hand is expected to push higher consumer demand for durable goods, which will give impetus to industrial sector leading to creation of more jobs. The automobile sector and companies get huge push and their dependents will lead to higher revenue for the govt. More money also means increased savings, which have been the biggest strength of the middle class economy of the country. Higher consumption and demand are likely to create more jobs in the country in various sectors–particularly manufacturing. Clearly the strongest effect on the 7th pay commission will be on the aggregate demand in the Indian economy. The commission had recommended raising the minimum pay hike to Rs18,000 from Rs7,000, along with the maximum pay being raised from the existing Rs80,000 to Rs2.5 lakh as well as a fitment factor of pay fixation uniformly approved at 2.57 times of basic pay. These recommendations were approved by the Union cabinet. The government had also approved a hike in allowances earlier this July. However, around 48 lakh central government and 52 lakh pensioners are under the impression that the implementation of the new pay revision system is a mere distraction that government is using to take cover and to hide their incapability of taking a decision under the recommendation of 7th Pay Commission. To know more about 7th Pay Commission, you should be aware of its Pros and Cons given below: Pay Commission comes up with its own pros and cons. PROS: 1-Boosting demand – When over 1 crore govt employees and pensioners will receive over a 23 of hike in salaries and pensions, it will boost the overall demand scenario in the economy, leading to more expenditure, thus benefiting the country’s gross domestic product (GDP) 2- A savior amid global market turmoil– The Seventh pay commission has rendered a much-needed relief to the market concerned over a spate of issues from Britain’s verdict to leave the European Union CONS:(i) Fiscal deficit:- many widen while the Budget for 2016-17 did not provide an explicit provision for implementation of 7th pay commission, The govt’s kitty is likely to have an additional burden of Rs.1.02 lakh crore, or nearly 0.7 percent of GD, which may make it troublesome for the govt to meet its fiscal deficit target for the current financial year (ii) Inflation risk:– RBI has repeatedly commented that it sees an upside risk to Consumer Price Inflation Index (CPI) inflation on the back of 7th Pay Commission.