Cabinet decisions on Implementation of the recommendations of 7th Central Pay Commission
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the implementation of the recommendations of 7th Central Pay Commission (CPC) on pay and pensionary benefits. It will come into effect from 01.01.2016.
In the past, the employees had to wait for 19 months for the implementation of the Commission’s recommendations at the time of 5th CPC, and for 32 months at the time of implementation of 6th CPC. However, this time, 7th CPC recommendations are being implemented within 6 months from the due date.
The Cabinet has also decided that arrears of pay and pensionary benefits will be paid during the current financial year (2016-17) itself, unlike in the past when parts of arrears were paid in the next financial year.
The recommendations will benefit over 1 crore employees. This includes over 47 lakh central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the defence forces.
Highlights:
1.The present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix as recommended by the Commission has been approved. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the Pay Matrix. Separate Pay Matrices have been drawn up for Civilians, Defence Personnel and for Military Nursing Service. The principle and rationale behind these matrices are the same.
2. All existing levels have been subsumed in the new structure; no new levels have been introduced nor has any level been dispensed with. Index of Rationalisation has been approved for arriving at minimum pay in each Level of the Pay Matrix depending upon the increasing role, responsibility and accountability at each step in the hierarchy.
3.The minimum pay has been increased from Rs.7000 to 18000 p.m. Starting salary of a newly recruited employee at lowest level will now be Rs. 18000 whereas for a freshly recruited Class I officer, it will be Rs. 56100. 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.
4.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.
5.Rate of increment has been retained at 3 %. This will benefit the employees in future on account of higher basic pay as the annual increments that they earn in future will be 2.57 times than at present.
6.The Cabinet approved further improvements in the Defence Pay Matrix by enhancing Index of Rationalisation for Level 13A (Brigadier) and providing for additional stages in Level 12A (Lieutenant Colonel), 13 (Colonel) and 13A (Brigadier) in order to bring parity with Combined Armed Police Forces (CAPF) counterparts at the maximum of the respective Levels.
7.Some other decisions impacting the employees including Defence & Combined Armed Police Forces (CAPF) personnel include :
- Gratuity ceiling enhanced from Rs. 10 to 20 lakh. The ceiling on gratuity will increase by 25 % whenever DA rises by 50 %.
- A common regime for payment of Ex-gratia lump sum compensation for civil and defence forces personnel payable to Next of Kin with the existing rates enhanced from Rs. 10-20 lakh to 25-45 lakh for different categories.
- Rates of Military Service Pay revised from Rs. 1000, 2000, 4200 & 6000 to 3600, 5200, 10800 & 15500 respectively for various categories of Defence Forces personnel.
- Terminal gratuity equivalent of 10.5 months of reckonable emoluments for Short Service Commissioned Officers who will be allowed to exit Armed Forces any time between 7 and 10 years of service.
- Hospital Leave, Special Disability Leave and Sick Leave subsumed into a composite new Leave named ‘Work Related Illness and Injury Leave’ (WRIIL). Full pay and allowances will be granted to all employees during the entire period of hospitalization on account of WRIIL.
8. The Cabinet also approved the recommendation of the Commission to enhance the ceiling of House Building Advance from Rs. 7.50 lakh to 25 lakh. In order to ensure that no hardship is caused to employees, four interest free advances namely Advances for Medical Treatment, TA on tour/transfer, TA for family of deceased employees and LTC have been retained. All other interest free advances have been abolished.
9. The Cabinet also decided not to accept the steep hike in monthly contribution towards Central Government Employees Group Insurance Scheme (CGEGIS) recommended by the Commission. The existing rates of monthly contribution will continue. This will increase the take home salary of employees at lower levels by Rs. 1470. However, considering the need for social security of employees, the Cabinet has asked Ministry of Finance to work out a customized group insurance scheme for Central Government Employees with low premium and high risk cover.
10. The general recommendations of the Commission on pension and related benefits have been approved by the Cabinet. Both the options recommended by the Commission as regards pension revision have been accepted subject to feasibility of their implementation. Revision of pension using the second option based on fitment factor of 2.57 shall be implemented immediately. A Committee is being constituted to address the implementation issues anticipated in the first formulation. The first formulation may be made applicable if its implementation is found feasible after examination by proposed Committee which is to submit its Report within 4 months.
11. The Commission examined a total of 196 existing Allowances and, by way of rationalization, recommended abolition of 51 Allowances and subsuming of 37 Allowances. Given the significant changes in the existing provisions for Allowances which may have wide ranging implications, the Cabinet decided to constitute a Committee headed by Finance Secretary for further examination of the recommendations of 7th CPC on Allowances. The Committee will complete its work in a time bound manner and submit its reports within a period of 4 months. Till a final decision, all existing Allowances will continue to be paid at the existing rates.
12. The Cabinet also decided to constitute two separate Committees (i) to suggest measures for streamlining the implementation of National Pension System (NPS) and (ii) to look into anomalies likely to arise out of implementation of the Commission’s Report.
13. Apart from the pay, pension and other recommendations approved by the Cabinet, it was decided that the concerned Ministries may examine the issues that are administrative in nature, individual post/ cadre specific and issues in which the Commission has not been able to arrive at a consensus.
14. As estimated by the 7th CPC, the additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs. 1,02,100 crore. There will be an additional implication of Rs. 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16.
PRAKASH CHANDRA DALAI says
I have posting of senior clerk of state Govt odisha now i am getting salary in basic pay Rs- 6870/- GP-2400/- DA-125% , sir please may be confirm my salary hike in 7th pay
sunil kumar says
Has the higher gradepay recommended for certain posts has also been passed by the cabinet
For eg inspector of posts 4600
Cbi subinspector 4600 etc
.
Ashok says
Last day announcement by the Government for the pay hike of the Central Govt employees after 10 years has virtually created brouhaha in media. News are being given in a manner which are creating wrong impression in public. The only article that has analysed the issue in rational manner and which came to my notice is that written by Shri Ravish. Rest are saying that the salary of govt employees has become more than doubled as if those who were getting gross salary of say Rs. 50,000 as on 31.12.2015 will be getting more tha Rs. 1 lakh. It is not true. As on 01. 01. 2016, there was 119% of DA (to offset the effect of inflation) on basic salary which will become zero once salary is fixed as per 7th pay commission. So as on 01. 01. 2016, govt employees were already getting more than double of the basic salary. As on 01.01.2016, employee at basic salary of Rs.7000 was getting Rs. 15330 as salary plus DA which will now be Rs 18000 and hence the increase for him is only of Rs 2670. Considering Housing allowance and Traveling allowance, total increase in gross salary is about 23.5%. This increase is given after 10 years and will continue to be the same for another 10 years.
Now the question comes, is it more or less? Let’s examine it objectively.
23.5% is the real hike in the salary of the employees over 10 years which is over and above the 3% annual increment. This increase is to be seen in the backdrop of economic growth over a decade. On an average Indian economy has grown @ 7.6% in the last decade. This, with annual increment of 3%, actual growth in the income of Govt employees lagged behind by 4.6% per annum. Even by simple arithmetic calculation, over 10 years the salary could not keep pace with economic growth and lagged by 36% ( actually it comes to 57% by compounding method). Against this backdrop hike of 23.5% does not seem adequate specifically when this hike is going to stay for another 10 years.
I also watched some debate on the issue where comparison was made with private sectors. Let’s see this also. As per one report of 2015 the annual salary of Chairman/ CEOS of Indian companies were as follows:
Kalanithi Maran Rs.59.89 crore,
Kaveri Kalanithi Rs.59.89 crore,
Naveen Jindal Rs.54.98 crore,
Kumar Magalam Birla Rs. 49.62 crore
Pawan Munjal Rs. 32.73 crore
Brij Mohanlal Munjal Rs. 32.73 crore
Sunil Kant Munjal Rs. 31.51 crore
P. R. R. Rajha Rs. 30.96 crore
Murli K Divi Rs. 26.46 crore
Now the Cabinet Secretary which is actually CEO of the Govt of India will be getting only 2.5 lakh per month or 30 lakh per annum. where is the comparison? No, no, no don’t say that their salaries are inclusive of profit on their investment, not at all. Profits are separately taken as dividend etc. How many times you have heard debate on this fat pay cheque? Do not say that public money is not involved there. All Public Ltd. Companies are getting public money through public issues of shares.
Now, see the real terms picture. In the year 2006 those who were getting 7000 will now get 18000. In 2006, gold price was Rs 8400 per 10 gms which is at present Rs. 30000. An employee receiving Rs. 7000 was able to purchase 8.33 grams of gold with one month salary while with enhanced salary of Rs. 18000 he will be able to buy only 6 grams of gold today. Is this a cause for cheer and all these debates ? If comparison is made in terms of real estate price rise, the situation will be worse.
Some more examples will open the eyes of the critics. Annual fee of IIT has been recently enhanced from Rs. 50 thousand to Rs 2 lakhs. 4 times hike. If a middle level officer’s both son qualify for IIT, he will have to pay Rs. 34000 per month towards fee only. Even if his salary is about Rs 75000, he won’t be able to afford this fee. As out of Rs 75000, about 7000 will go towards income tax, 5000 towards GPF, 15000 house rent. He will be left with Rs 48000 and if fee of Rs 34000 is paid he will be left with Rs 14000 to feed the family and run the household. Is it possible?
Have you ever analysed how a journalist becomes owner of a news channel in short span of time? What’s the entry level salary and what is the amount involved in owning a news channel? Whether rise in that sector is lower compared to Central Govt employees?
It is damn easy to talk about the salary, efficiency, morality and accountability of babus but it is damn difficult to live the life of a Govt servant. What is the accountability of media, corporate houses, various NGOs, those analysts ? Compared to them accountability of Govt employees is much higher.
D M Ghaisas says
Employees retired as on 30-06-2016 & onwards what will be the limit for gratuity for them whether ₹ 10/- lakhs or ₹ 20/- lakhs. Pl confirm
Bhaskaran KV says
In 6th CPC, in fact taken 19months but there were lot of change than the 6CPC Original report and employees got 40% than the recommended 20% weightage. Y in 7th CPC took 9 months for just implementing the same report without any changes, is it a credit or shame?