The Seventh Pay Commission headed by Justice AK Mathur on Thursday submitted its report to Finance Minister Arun Jaitley, suggesting 23.55% hike in pay and allowances of Govt employees on 9th November 2015.

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Following are the highlights of the recommendations made by the 7th Central Pay Commission, headed by Justice A K Mathur, which submitted its report to Finance Minister Arun Jaitley today.

23.55 per cent increase in pay and allowances recommended

* Recommendations to be implemented from January 1, 2016

* Minimum pay fixed at Rs 18,000 per month; maximum pay at Rs
2.25 lakh

* The rate of annual increment retained at 3per cent

* 24 per cent hike in pensions
  • Grade Pay System abolished
  • Fitment formula will be 2.57. So using present basic pay, 7th CPC pay can be calculated by multiplying the same with 2.57 factor.
  • Increase in Military service Pay increased to 16,500
  • 52 allowances abolished
  • 16% increase in pay
  •  23.55% increase overall salary when taking in to increase in allowances also
* One Rank One Pension proposed for civilian government employees on line of OROP for armed forces

* Ceiling of gratuity enhanced from Rs 10 lakh to Rs 20 lakh; ceiling on gratuity to be raised by 25 per cent whenever DA rises by 50 per cent


* Military Service Pay (MSP), which is a compensation for the various aspects of military service, will be admissible to the defence forces personnel only

* MSP for service officers more than doubled to Rs 15,500 per month from Rs 6,000 currently; for nursing officers to Rs 10,800 from Rs 4,200; for JCO/ORs to Rs 5,200 from Rs 2,000 and for non-combatants to Rs 3,600 from Rs 1,000

* Short service commissioned officers will be allowed to exit the armed forces at any point in time between 7 to 10 years of service

* Commission recommends abolishing 52 allowances; another 36 allowances subsumed in existing allowances or in newly proposed allowances.

* Recommendations will impact 47 lakh serving govt employees, 52 lakh pensioners, including defence personnel.

Salary to go up by 16%; allowances by 63%; pension up by 24%

The finance minister said the recommendations of the Pay Commission will impact 47 lakh serving government employees and will have a Rs 1.02 lakh crore monetary impact. "Of this amount, Rs 74,000 crore will be the additional cost on Union Budget and Rs 28,000 crore on Railway Budget," the CNBC-TV18 report said.
There is little clarity however on whether all or some of the fiscal impact would be seen in FY16 itself.
Jaitley said an implementation secretariat has been created, headed by the expenditure secretary while a separate empowered committee under the cabinet secretary will take a view on various suggestions from stakeholders. The finance minister said the government will try and not take five months to finally implement the pay hikes of Central government employees and pensioners, the time previous government took to implement the recommendations of the 6th Pay Commission.
The report also recommends a minimum basic pay for Central government staff of Rs 18,000 with a maximum pay of Rs 2.25 lakh per month.
Addressing the media after submitting the report, Justice Mathur said outside the Ministry of Finance, "The report runs into 900 pages. We held wide consultations before preparing the report. We travelled across the country and saw hardship of all those concerned."
Here are some important takeaways from the 7th Pay Commission recommendations:
• Recommended date of implementation is 1 January 2016. Minimum pay set at Rs 18,000 and maximum at Rs 2.25 lakh with the cabinet secretary's emolument at Rs 2.5 lakh per month.
• Rate of annual increment retained at 3 percent.
• The recommendations of the commission will impact 47 lakh serving Central government employees and 54 lakh pensioners.
• Gratuity doubled to Rs 20 lakh; 52 allowances abolished and 36 others submerged.
• The present system of pay bands and grade pay has been dispensed with and a new pay matrix has been designed. 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. All existing levels have been subsumed in the new structure; no new levels have been introduced nor has any level been dispensed with.
• A pay matrix similar to that for civilian employees has been drawn up for defence personnel. The commencement of the Defence Pay Matrix for combatants corresponds to the existing GP 2000, which is the induction level for sepoys and equivalent.
• Each defence personnel, regardless of when he or she retires, should draw the same pension. There is no clarity on whether this is in fact a reiteration of OROP
• The edge, presently accorded to the Indian Administrative Service in the
form of two additional increments @ 3 percent over their basic pay at three promotion stages i.e., promotion to the Senior Time Scale (STS), to the Junior Administrative Grade (JAG) and the NFSG to continue in the proposed pay matrix.