7th Central Pay Commission submitted its report; recommended 23.55% hike

The increase in pay will be 16 percent, increase in allowances will be 63 percent and increase in pension will be 24 percent.

Created On: Nov 20, 2015 09:24 ISTModified On: Nov 20, 2015 16:15 IST

7th Central Pay CommissionThe 7th Central Pay Commission (CPC) headed by Justice AK Mathur submitted its report on 19 November 2015 to the Union Finance Minister Arun Jaitley. The commission recommended 23.55 percent hike in pay and allowances of government employees.

The recommended pay revision will come into effect from 1 January 2016.

Recommendations of 7th Central Pay Commission

  • The minimum pay for government employees is recommended to be set at 18000 rupees per month.
  • The maximum pay is recommended to be 225000 rupees per month for Apex Scale and 250000 per month for Cabinet Secretary and others presently at the same pay level.
  • The increase in pay will be 16 percent, increase in allowances will be 63 percent and increase in pension will be 24 percent.
  • The present system of pay bands and grade pay has been dispensed and a new pay matrix has been designed. Grade Pay has been subsumed in the pay matrix. The status of the employee, determined by grade pay, will now be determined by the level in the pay matrix.
  • The rate of annual increment for employees will be 3 percent.
  • Abolition of 52 allowances and introduction of a Health Insurance Scheme.
  • One Rank One Pension proposed for civilian government employees on line of OROP for armed forces.
  • Increase in Military Service Pay and revised pension formula for civil employees including Central Armed Police Forces (CAPF) and Defence Personnel retiring before 1 January 2016.
  • Military Service Pay (MSP), which is a compensation for the various aspects of military service, will be admissible to the defence forces personnel only.
  • Ceiling of gratuity enhanced from 10 lakh rupees to 20 lakh rupees and ceiling on gratuity will be raised by 25 percent whenever DA rises by 50 percent.
  • Short service commissioned officers will be allowed to exit the armed forces at any point in time between 7 to 10 years of service.
  • A fitment factor of 2.57 which will be applied uniformly to all employees.
  • Systemic change in the process of Cadre Review for Group A officers recommended.
  • Allowances relating to Risk and Hardship will be governed by the newly proposed nine-cell Risk and Hardship Matrix.
  • It recommends that House Rent Allowance (HRA) be paid at the rate of 24 percent, 16 percent and 8 percent of the new Basic Pay for Class X, Y and Z cities respectively. The rate of HRA will be revised to 27 percent, 18 percent and 9 percent respectively when DA crosses 50 percent.
  • It recommended abolition of all non-interest bearing advances and increased the limit for interest-bearing advances for buying home from 7.5 lakh rupees to 25 lakh rupees.
  • Introduction of a Health Insurance Scheme for Central Government employees and pensioners has been recommended.
  • It recommends that in case of death in the line of duty, the force personnel of CAPFs should be accorded martyr status, at par with the defence forces personnel.
  • A consolidated pay package of 450000 rupees and 400000 rupees per month for Chairpersons and Members respectively of select Regulatory bodies.
  • Introduction of the Performance Related Pay (PRP) for all categories of Central Government employees, based on quality Results Framework Documents and Annual Performance Appraisal Reports.
  • All India Service officers and Central Services Group A officers who have completed 17 years of service should be eligible for empanelment under the Central Staffing Scheme and there should not be two year edge.
  • The age of superannuation for all CAPF personnel should be 60 years uniformly.

Implications of the Recommendations

  • The pay revision will impact 47 lakh serving employee and 52 lakh pensioners of the Central Government including in the Defence and Railways.
  • Financial impact of implementing recommendations will be 1.02 lakh crore rupees, out of which 73650 crore rupees will be borne by Central Budget and 28450 crore rupees by Railway Budget.
  • Total impact of the recommendations will amount to 0.65 percent of GDP.

The 7th Central Pay Commission headed by Justice A K Mathur was set up on 28 February 2014 by then Union Government to revise remuneration of employees and pensioners of central government including Defence and Railways.

The other members of the Commission were: Vivek Rae (full time Member), Dr. Ratin Roy (part time member) and Meena Agarwal (Secretary).

The government constitutes the Pay Commission almost every 10 years to revise the pay scale of its employees and often these are adopted by states after some modifications. The 6th Central Pay commission was constituted under the Chairmanship of BN Srikrishna in October 2006.

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