Seventh Pay Commission Recommendations Announced Thursday Nov 19,2015

 

Finance Minister Arun Jaitley receiving the report of Seventh Pay Commission from its Chairman Justice AK Mathur on ThursdayNov 19,2015

The seventh Pay Commission, headed by Justice AK Mathur, on Thursday submitted its report to Finance Minister Arun Jaitley. The recommendations, once cleared by the Cabinet, will lead to a substantial hike in salaries of central government employees and pensioners with effect from January 1, 2016.

• Recommendations will impact 47 lakh serving govt employees, 52 lakh pensioners, including defence personnel.

• Recommendations to be implemented from January 1, 2016

• Financial impact of implementing recommendations in toto will be Rs 1.02 lakh crore - Rs 73,650 crore to be borne by Central Budget and Rs 28,450 crore by Railway Budget

• 23.55 % increase in pay and allowances recommended
• Minimum pay fixed at Rs 18,000 per month; maximum pay at Rs 2.25 lakh
• The rate of annual increment retained at 3 %
• Cabinet Secretary to get Rs 2.5 lakh as against Rs 90,000 per month pay band currently
• 24 % hike in pensions
• One Rank One Pension proposed for civilian government employees on line of OROP for armed forces
• Ceiling of gratuity enhanced from Rs 10 lakh to Rs 20 lakh; ceiling on gratuity to be raised by 25 % whenever DA rises by 50%

10 big recommendations of the seventh Pay Commission

1. Basic salaries of 47 lakh serving government employees will go up by 16 %, while their allowances will rise by 63 %. As a result, the overall hike in salaries will be 23.55 per cent.  This compares with the 35 % salary hike central government employees got on implementation of the sixth Pay Commission in 2008.

2. The house rent allowance has been increased by a massive 139 %; 52 allowances have been done away with, while 36 allowances have been subsumed in existing allowances or in newly proposed allowances.

3. Pension of 52 lakh retired employees will go up by 24%, according to the recommendations of the seventh Pay Commission.

4. A system on the lines of One Rank One Pension (OROP) for the armed forces has also been proposed for government officials for the first time.

5. The minimum salary for central government employees has been fixed at Rs. 18,000 per month. The salary for employees in the apex scale has been capped at Rs. 2.25 lakh per month. However, the salary of cabinet secretary (the highest-ranking civil servant) has been fixed at Rs. 2.50 lakh per month.

6. Central government employees will get an annual increment of 3 per cent. The seventh Pay Commission has also recommended the abolition of grade pay and pay band for central government employees.

7. Introduction of a health insurance scheme has been recommended. Many steps have been recommended to improve the New Pension Scheme (NPS).

8. Military Service Pay (for armed forces) for service officers has been more than doubled to Rs. 15,500 per month. 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 uniform retirement age for all paramilitary forces at 60 years has been proposed

9. The government will incur and additional expenditure of Rs. 1.02 lakh crore to pay higher salaries and pensions recommended by the seventh Pay Commission. Of this, Rs. 28,000 crore will go for salary hikes of railway employees

10.  According to the finance minister, the implementation of the Seventh Pay Commission will impact the fiscal deficit by 0.65 per cent of GDP.