Central staff salaries may go up by 23%
Date of implementation: Jan 1, 2016
Beneficiaries: 47 lakh staff, 52 lakh pensioners
In a windfall for Central Government employees, the 7th Pay Commission has recommended a hike of 23.55 per cent in salary and allowances which will entail an expenditure of Rs1.02 lakh crore on the government.
Justice AK Mathur submitted the 7th Pay Commission report to Finance Minister Arun Jaitley today. The Central Government constitutes the pay commission every 10 years to revise the pay scale of its employees. The Union Cabinet had extended the term of the panel in August by four months, till December. The 6th Pay Commission was implemented with effect from January 1, 2006.
The Finance Minister said the government would look into the report before its implementation.
The report has implications for 47 lakh employees of the Central Government and 52 lakh pensioners.
While the impact on the fiscal deficit will be 0.65 per cent, putting strain on government finances, analysts say the pay panel bonanza will lift consumption in the economy with increased spending on automobiles, consumer durables, real estate and discretionary items. The minimum pay in the government is recommended to be set at Rs 18,000 per month. The maximum pay has been set at Rs 2.25 lakh per month for apex scale and Rs 2.50 lakh per month for Cabinet Secretary and others at the same level.
The recommended date of implementation is January 1, 2016. The total financial impact for 2016-17 is likely to be Rs 1.02 lakh crore over the expenditure.
The impact on the fiscal side entails an increase of 0.65 per cent points in the ratio of expenditure on to the GDP compared to 0.77 per cent in case of the 6th Pay Commission.
Of the total financial impact of Rs 1.02 lakh crore, Rs 73,650 crore will be borne by the General Budget and Rs 28,450 crore by the Railway Budget. A new pay structure has been recommended by the commission. The report says in light of 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, which was earlier determined by grade pay, will now be determined by the level in the pay matrix.
The rate of annual increment is being retained at 3 per cent. The report has made the performance benchmarks for MACP more stringent from “good” to “very good”.
The commission proposes against grant of annual increments in case of those employees who are unable to meet the benchmark either for MACP or for a regular promotion in the first 20 years of their service. The Military Service Pay, which is a compensation for the various aspects of military service, will be admissible to the defence force personnel only. As before, Military Service Pay will be payable to all ranks up to and inclusive of Brigadiers and their equivalents.
Short Service Commissioned Officers will be allowed to exit the Armed Forces at any point in time between seven and 10 years of service, with a terminal gratuity equivalent of 10.5 months of reckonable emoluments. They will further be entitled to a fully funded one year executive programme or an MTech programme at a premier institute.
The commission has recommended a revised formulation for lateral entry and resettlement of defence force personnel, which keeps in view the specific requirements of organisation to which such personnel will be absorbed. The panel has recommended abolishing 52 allowances altogether. Another 36 allowances have been abolished as separate identities, but subsumed either in an existing allowance or in newly proposed allowances. Allowances relating to risk and hardship will be governed by the proposed risk and hardship matrix.