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its report in a year.

The second panel was set up in August 1957 and had given its report exactly after two years, with a financial impact of Rs 39.6 crore to the exchequer. The Third Pay Commission was set up in April 1970 and it submitted its recommendations in March 1973. It cost the government Rs 144 crore. The Fourth Pay Commission was constituted in June 1983, and its report was given in three phases within four years and the financial burden to the government was Rs 1,282 crore. The Fifth Pay Commission was set up in 1994 and it was implemented in 1997 at a cost of Rs 17,000 crore.

If the government decides to implement the commission’s recommendation, the exchequer will have to take a hit of Rs 12,561 crore in 2008-09 alone. Besides this, the government would also have to bear Rs 18,060 crore as one time expenditure on arrears from January 1, 2006. Experts feel that about Rs 25,000 crore to Rs 30,000 crore would circulate in the market, which should be enough to spur a consumer boom.

Industry watchers also feel that since the tax collection has been buoyant for the past few years and the government had anticipated the outgo well in advance, early implementation of the proposals would not be a problem.

Meanwhile, the anticipated increase in disposable income of government employees has become a beacon of hope for the consumer durables, automobiles and two-wheelers industries, which have witnessed sluggish sales growth in the first three months of this year. The penetration of consumer durables also remains low in the country, which indicates a large consumer base of first-time buyers especially in Tier II and III cities. The consumer durables market is estimated to be worth Rs 25,000 crore and growing at 12%.