Seventh Central Pay Commission

 

A Pay Commission is appointed by the government once every 10 years to look at the pay structure of Union and State government employees and pensioners

Pay commissions study the current pay scales and make recommendations on not just pay increases, but also pay structure. For example, the Sixth Pay Commission recommended that transport allowance, which was a lump-sum amount earlier, be paid along with a Dearness Allowance component. Likewise, the House Rent Allowance calculation was pegged to a percentage of pay

The Seventh Pay Commission was constituted in February 2014 under the chairmanship of Justice Ashok Kumar Mathur to submit its recommendations by August 2015

The Seventh Pay Commission recommendations are expected to be effective from January 1, 2016

The Seventh Central Pay Commission has been granted a four-month extension to submit its recommendations, after the Union Cabinet approved the decision on Wednesday.

The commission, which reviews pay scales of about 48 lakh Central government employees and 55 lakh pensioners, was constituted on February 28, 2014 by the UPA government and was supposed to submit its recommendations by August 27,2015
However, the commission had asked for a four-month extension due to the ‘volume of work’ and ‘intensive stakeholder consultations’
As a result of the Cabinet decision, the request stands granted.

Note

The 14th Finance Commission estimates that after the Sixth Pay Commission, pay and allowances to Central government employees more than doubled in a four-year period between 2007-08 and 2011-12

According to the Medium-Term Expenditure Framework Statement tabled in Parliament, the salary outgo of central government employees will go up by 9.56 % to Rs. 1,00,619 crore in current fiscal.

The pace will increase further in 2016-17 at 15.79 per cent to Rs. 1.16 lakh crore with the likely implementation of the 7th Pay Commission
Currently, Central government pay and allowances account for 1 per cent of the country’s GDP. This could increase if the pay hikes are significant.

Based on the medium-term expenditure framework presented to Parliament, a 16 per cent pay increase is likely from the Seventh Pay Commission.

This could add 0.2-0.3 per cent of GDP by way of additional expenditure in 2016-17