The Sixth Pay Commission on Monday recommended a hefty increase in salaries of over 4.5 million central government employees, a move that would cost the exchequer Rs 12,561 crore in 2008-09.

The Commission, headed by Justice B N Srikrishna, submitted its report to Finance Minister P Chidambaram recommending implementation of the revised pay from January 1, 2006, which would impose an arrear payout burden of Rs 18,060 crore on the government.

The revised pays fixed the salary of Cabinet Secretary at Rs 90,000 a month and Secretary at Rs 80,000 per month, while making Rs 6,660 as the minimum entry level salary.

Recommending a substantial increase in allowances and other benefits, the Commission also suggested a 40 per cent increase in pension and family pension.

The bonanza to employees would take effect once the Cabinet considers the recommendations of the Sixth Pay Commission that was set up in 2006.

While the finance minister did not announce any provision in the Budget for the increased wage bill in 2008-09, he had maintained that there was enough head-room to meet the additional expenditure.

Recommending a 40 per cent hike for fitment in pre-revised basic pay, the report said: "The Commission is recommending a new structure of running pay bands and grade pay. In the structure, grade pay has been normally taken as 40 per cent of the maximum of the pre-revised pay scales."

"I have recommended something which is good for the nation", Justice Srikrishna told reporters after submitting the report to the finance minister.

The panel recommended the annual increment of pay at the rate of two-and-half per cent and the date for it as July 1.

Seeking a substantial hike in different allowances, the Commission recommended payment of arrears in two installments and said that out of the total one-time expenditure of Rs 18,060 crore, as much as Rs 12,642 crore will have to be borne in the union budget and the balance of Rs 5,418 crore in the Railway budget.

Recognising the hardships faced by the defence personnel, the panel put the military services' pay on par with those recommended for civilians, while suggesting an allowance of Rs 6,000 per month for officers till the rank of Brigadier and equivalent.

"A scheme of PRIS (performance related incentive scheme) has been recommended. PRIS should also work as a substitute for bonus, honorarium and overtime allowances," the report said.

Sixth Pay Commission: Coverage