The government notified implementation of the Seventh Pay Commission recommendations and directed government departments to commence fixing salaries to be paid to individual employees in August .

In a move that will cheer millions of central government employees and likely spur demand for consumer durables , the government has decided to pay them seven months’ arrears at one go with their August salary.

• The arrears are on account of the government deciding to implement the Seventh Pay Commission’s recommendations with effect from January 2016.

• D.K. Joshi, chief economist at Crisil Ltd, said the additional disposable income coming into the hands of central government employees just ahead of the festive season will add to the urge to spend, especially on consumer goods.

• The entry-level pay has been recommended to be raised to Rs 18,000 per month, from the current Rs 7,000, while the maximum pay, drawn by the Cabinet Secretary, has been fixed at Rs 2.5 lakh per month from the current Rs 90,000. The previous 6th Pay Commission had recommended a 20 percent hike which the government doubled while implementing it in 2008.

• The pay hike will provide a mild boost to the economy. While the arrears will give a one-time boost to consumption spending, the increase in salary will add to the ability to take long-term loans. People will also need to understand a paystub example to properly budget for this situation. If the monsoon remains on track, then it will provide another boost to the economy later in the year through increased rural spending,” he said.

• “The Pay Commission revision will have a positive impact on the consumer durable sector,” said Dhanraj Bhagat, partner at Grant Thornton Llp, a consulting firm.

• The revised pay structure, effective from 1 January 2016, includes dearness allowance of 125%; a committee has been set up to decide the implementation of allowances such as housing rent.