The Central government's salary bill will rise by 9.56% to Rs 1,00,619 crore with the implementation of the recommendations of the 7th Pay Commission, according to a statement tabled in Parliament by union finance minister Arun Jaitley on Wednesday.
The rise will be 15.79% to reach Rs 1.16 lakh crore in the next financial year, according to the Medium-Term Expenditure Framework Statement tabled by him.
"The award of VII Central Pay Commission (CPC) and its impact on government finances poses a risk," The Economic Times reported, citing the statement.
The 7th Pay Commission is likely to hike salaries of government employees by nearly 40%, according to an analyst at global brokerage firm Credit Suisse.
The statement also cautioned over the mounting pension bill. It estimates the pension bill to climb higher to Rs 88,521 crore in the current fiscal and reach Rs 1.02 lakh crore in 2016-17.
"Like in salaries, higher than normative growth has been provided for the projection of outlay on pensions during 2016-17. For the second year of the projection (2017-18), a normative growth has been assumed," the statemen said.
The 7th Pay Commission is scheduled to submit its recommendations by October and is likely to be implemented by the Modi government by the end of the year.
