Salaries, pensions up 23 %
The Centre today approved recommendations of the 7th Pay Commission on pay and pension which will boost consumption and economy by putting extra disposable income in the hands of the 47 lakh Central Government employees and 53 lakh pensioners.
The decision to implement the recommendations, including 23.5 per cent hike in pay and pension, was taken at a meeting chaired by PM Narendra Modi. Briefing the media, Finance Minister Arun Jaitley said the Cabinet, however, deferred the revision of allowances.
Calling the hike “inadequate”, workers’ unions have decided to start protests from next week.
A panel headed by Finance Secretary Ashok Lavasa would look into the pay panel recommendations in that regard as there was resentment among employees over the suggestions to scrap four allowances. Till then, existing allowances would continue.
In January, the government set up a panel headed by Cabinet Secretary PK Sinha to process pay panel recommendations. The commission had recommended a 23.5 per cent increase in pay, pension and allowances under a “business as usual” scenario. It envisaged a hike of Rs 39,100 crore in the pay bill, Rs 29,300 crore in allowances and Rs 33,700 crore in pension, taking the total financial impact for 2016-17 to Rs 1.02 lakh crore.
With allowances deferred, the burden on the exchequer would be Rs 72,800 crore on account of salaries and pension and over Rs 12,000 crore on account of arrears, aggregating to Rs 84,933 crore.
Of this, Rs 60,608 crore would come from the General Budget and Rs 24,325 crore from the Railway Budget.
The recommendations will be effective from January 1, 2016. The Finance Minister said, “The employees had to wait for 19 months for the implementation of the 5th Pay Commission and for 32 months in case of the 6th Pay Commission. This time, the 7th Pay Commission recommendations are being implemented within six months from the due date.”
The Cabinet also decided that pay and pension arrears would be paid in the current financial year (2016-17) itself, unlike in the past when parts of arrears were paid during the next financial year.
The minimum pay has been raised from Rs 7,000 to Rs 18,000 per month, while the maximum pay has been capped at Rs 2.5 lakh per month. The starting salary of a newly recruited employee at the lowest level will now be Rs 18,000, while it will be Rs 56,100 for a freshly recruited Class I officer. This reflects a compression ratio of 1:3.12 signifying that pay of a Class I officer on direct recruitment will be three times the pay of an entrant at lowest level. For the purpose of revision of pay and pension, a fitment factor of 2.57 will be applied across all levels in the pay matrices. The maximum pay is set at Rs 2.25 lakh per month for apex scale and Rs 2.5 lakh per month for Cabinet Secretary and others at the same pay level (as against the current Rs 90,000 per month).
The report had recommended replacing the present system of pay bands and grade pay with a new pay matrix. Separate pay matrices have been drawn up for civilians, defence personnel and Military Nursing Service. The principle and rationale behind these matrices are the same.
The Cabinet approved further improvements in “defence pay matrix” by enhancing “index of rationalisation” for brigadiers and providing for additional stages for Lt colonels, colonels and brigadiers to bring parity with their Combined Armed Police Forces counterparts. The lump sum ex gratia payable in respect of civil and defence personnel has been enhanced from Rs 10-20 lakh to Rs 25-45 lakh. The rate of Military Service Pay has been revised from Rs 1,000, 2,000, 4,200 and 6,000 to Rs 3,600, 5,200, 10,800 and 15,500, for defence personnel.
Govt okays 7th pay commission report
1 cr Central govt staff and pensioners to benefit
Rs 18,000 minimum pay, up from Rs 7,000; maximum hiked from Rs 90,000 to Rs 2.5 lakh
Rs 84,933 cr additional burden on the exchequer for 2016-17; this includes arrears for 6 months
For a freshly recruited Class I officer, pay will be Rs 56,100
Gratuity ceiling up from Rs 10 to Rs 20 lakh, will increase by 25% whenever DA rises by 50%
The hike to be implemented from January 1, 2016
Increment rate retained at 3%
Present system of pay bands and grade pay done away with
Status of an employee, hitherto determined by grade pay, will now be determined by the level in pay matrix
Separate pay matrices drawn up for civilians, defence personnel and for Military Nursing Service
Further improvements in the Defence Pay Matrix approved by enhancing Index of rationalisation for Level 13A (brigadier) and providing for additional stages in Level 12A (Lt colonel), 13 (colonel) to bring parity with Combined Armed Police Forces counterparts
Ceiling on House Building Advance to be raised from Rs 7.50 lakh to Rs 25 lakh