By Shishir Sinha, and Varun Kumar, CNBC-TV18

Here's another indication that the UPA is in election mode. After that farm loan waiver and tax breaks for the middle-class, the government is all set to spend Rs 53,000 crore on salary hikes for central government employees.

The wait is almost over for the lakhs of employees who serve the government of India. Sources have informed CNBC-TV18 that the sixth Pay Commission is close to finalising its recommendations and a windfall is on the cards for employees.

Salaries are expected to increase by 25 to 33% across the board and the hike will take place with retrospective effect from January 1, 2006. However, there is no scope for any interim relief till the recommendations are implemented.

But the recommendations come at a time when the government is already burdened with a huge farm loan waiver and other schemes benefiting the social sector. But fears of pressure on the treasury are countered by the larger than expected tax collections and an improving fiscal deficit.

But some voices feel the government may need a few years to absorb the financial impact, as had happened during the fifth Pay Commission. While the Railways have made some provisions for the pay hike in their Budget, the government may seek grants in Parliament.

Based on 2007-08 figures, the government may have to shell out an extra Rs 13,000 crore for salaries while arrears may cost up to Rs 40,000 crore and may need to be paid in installments.

State governments are not obliged to match the pay scales set by the Centre. But with the state-centre wage gap widening, the states may have no option but try and match up to the Centre's bonanza. 

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