NEW DELHI: In what could be a major bonanza for over four million central government employees, the Sixth Pay Commission has recommended an average hike of 40 per cent in salaries and doubling most allowances that would cost the exchequer Rs 12,561 crore in 2008-09.

On the heels of substantial benefits to tax payers in the Budget, the revised pay would benefit employees to the tune of Rs 18,060 crore by way of arrears as the Commission wanted implementation of the package from January 1, 2006.

Immediately after submitting the report to Finance Minister P Chidambaram, Commission Chairman Justice B N Srikrishna said: "I have recommended something which is good for the nation... The average hike will be 40 per cent."

The Cabinet Secretary would be the biggest beneficiary with a fixed revised salary of Rs 90,000 a month, followed by Rs 80,000 for Secretary. The minimum entry level monthly salary would be Rs 6,660 in the pay structure that seeks to guard against any stagnation.

The recommendation, to be considered by the Cabinet, pays special attention to defense personnel whose pay has been brought on par with civilian staff, besides making them eligible for special allowance up to Rs 6,000 per month.

Women and disabled employees have been given a special treatment in the report through a recommendation for improved leave and working conditions, while it paves the way for awarding performers through a higher 3.5 per cent rate of increment against the normal 2.5 per cent.

The Commission also sought to give major benefits to the pensioner, particularly as they grow older by recommending higher rates on attaining the age of 80, 85, 90, 95 and 100. It sought pension to be paid at 50 per cent of the higher of the average emoluments or last drawn pay without linking it to 33 years of service.

At the same time, a performance related incentive scheme is sought to be introduced to replace the ad-hoc bonus scheme immediately, the report said, adding that the scheme was budget neutral. Contrary to reports, the panel seeks to retain the superannuation age at 60 years, while recommending concession on this count for scientists and medical specialists.

The report also recommends bringing in experts on contract employment for posts requiring higher skills. Justice Srikrishna said: "The biggest highlight of the report is to revise the salary structure in such a way to make the government machinery more efficient," and pointed to the recommendations relating to performance related incentive scheme and variable increments to promote high performance.

"Existing rates of most of the allowances will be doubled both in case of defense forces as well as civilian employees," the report said and added that education allowance reimbursement would be Rs 1,000 per child per month for the existing Rs 50 and recommended 10-fold increase in hostel subsidy to Rs 3,000 a month.