The Pay Commission was set up to
extend recommendations regarding the work and salary structure of all civil and
military divisions that are employed under the government. Up till now, the
government has had seven pay commissions and the 7th pay
commission was set up in September 2013. The commission’s recommendations
impacting 33 lakh central government employees, 14 lakh armed forces personnel,
and 52 lakh pensioners, was accepted by the government on June 2016.
The 7th Pay
Commission recommended a 23.55% overall hike in pay, pensions and allowances.
It recommended a hike in minimum pay from Rs 7,000 to Rs 18,000 per month and
maximum pay at Rs 2,25,000 per month and Rs 2,50,000 per month for the cabinet
secretary and others at the same level. The gratuity ceiling was enhanced from
Rs 10 to Rs 20 lakh.
The system of pay bands and grade
pay was dropped and a new pay matrix was recommended by the commission while a
fitment factor of 2.57 was implemented. This would benefit employees in future
on account of higher basic pay as the annual increments that they earn in
future would be 2.57 times that at present. Separate pay matrixes were sketched
for civilians, defence personnel and for military nursing services.
The commission recommended a
revised pension formula for civil and defence personnel who had retired before
January 1, 2016. The aim of the formula was to bring a parity between the past
pensioners and current retirees. The past pensioners would be fixed in the new
pay matrix based on their previous pay band and grade pay, at which they
retired. The amount would then be raised by adding the number of increments
earned while in service at the rate of 3%. 50% of the total amount arrived
would be the new pension. An alternative calculation would be carried out,
which would be the multiple of 2.57 times of the current basic pension. The
pensioner would get whichever alternative would be higher.
The Commission also recommended
introduction of the Performance Related Pay (PRP) for all categories of Central
Government employees, based on quality Results Framework Documents, reformed Annual
Performance Appraisal Reports and some other broad guidelines. The Commission
has also recommended that the PRP should subsume the existing Bonus schemes.
The total financial expenditure
due to the revised salaries and pension amounts was Rs 1,02,100 crore out of
which Rs 73,650 crore was borne by the General Budget and Rs 28,450 crore by
the Railway Budget last fiscal.
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