All about the Seventh Pay Commission

The pay of 47 lakh central government employees will now go up and 52 lakh pensioners will benefit

GN Bureau | June 29, 2016


#rise   #pension   #salary   #Seventh pay commission   #central government  
The cabinet has approved recommendations of the seventh pay commission
Photo courtesy: PIB

The union cabinet on Wednesday approved the implementation of the Seventh Pay Commission.

The centre had earlier in January set up a panel headed by cabinet secretary P. K. Sinha to process the recommendations of the Seventh Pay Commission headed by justice AK Mathur. The key recommendation is a 23.55 percent increase in salaries, allowances and pension of central government employees and pensioners. This is on the basis of the recommendation for a 14.27 percent hike in basic pay.
 
 Union finance minister Arun Jaitley had in his Budget for 2016-17 provisioned Rs. 70,000 crore towards the Seventh Pay Commission.
 Here is everything you need to know about the proposed recommendations in the Seventh Pay Commission.
 
Recommended Date of implementation:
The recommended date of implementation is January 1, 2016.  Hence, government employees will get arrears from January this year.
 
Minimum Pay: Based on the Aykroyd formula, the minimum pay in the government is recommended to be set at Rs 18,000 per month. The current minimum pay is Rs 7,000.
 
Maximum Pay: Rs 2,25,000 per month for Apex Scale and Rs 2,50,000 per month for Cabinet Secretary and others presently at the same pay level. Presently maximum pay is Rs 90,000.
 
The financial implications:
The total financial impact in the FY 2016-17 is likely to be Rs 102,100 crore, over the expenditure as per the ‘Business As Usual’ scenario.  This is about 0.7 percent of the GDP.
 
Of this, the increase in pay would be Rs 39,100 crore, increase in allowances would be Rs 29,300 crore and increase in pension would be Rs 33,700 crore.
 
Out of the total financial impact of Rs 102,100 crore, Rs 73,650 crore will be borne by the general budget and Rs 28,450 crore by the railway budget.
In percentage terms the overall increase in pay and allowances and pensions over the ‘Business As Usual’ scenario will be 23.55 percent. Within this, the increase in pay will be 16 percent, increase in allowances will be 63 percent, and increase in pension would be 24 percent.
 
The total impact of the commission’s recommendations are expected to entail an increase of 0.65 percentage points in the ratio of expenditure on (Pay+Allowances+Pension) to GDP compared to 0.77 percent in case of VI CPC.
 
New Pay Structure:
Considering the issues raised regarding the Grade Pay structure and with a view to bring in greater transparency, the present system of pay bands and grade pay has been dispensed with and a new pay matrix has been designed. Grade Pay has been subsumed in the pay matrix. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the pay matrix.
 
 
 

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