India Inc has welcomed the Sixth Pay Commission report that suggested an average increase of 40 per cent in salaries of central government employees and said the move will not lead to a rise in inflation and revenue deficit of the government.

Industry body Ficci said the pay hike would not add to inflationary conditions and revenue deficit due to buoyant revenue collections.

"The revenue collections and the overall economy is growing. If these trends are kept intact, then this additional expenditure should not be too much of a problem," Ficci Secretary General Amit Mitra said.

Echoing similar sentiments, Assocham said increase in salaries would not fuel inflation and increase revenue deficit as the country is witnessing increased direct and indirect tax collections as a result of higher tax compliance.

"The government is going to witness substantial hike in its revenue collections, benefits of which ought to be given to its employees and there should be no grudge against such pay commissions' recommendations," Assocham President Venugopal Dhoot said.

Assocham said the move would make the central government employees more accountable, productive and responsive as the exchequer would shed Rs 12,561 crore (Rs 125.61 billion) in 2008-09 itself on account of higher package.

Also, Ficci said the hike would reduce the problem of governance and attract talented personnel, besides making the employees more responsible.

The Sixth Pay Commission 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 (Rs 180.6 billion) on the government.

Sixth Pay Commission: Coverage