Published On: Fri, Nov 20th, 2015

Seventh Pay Commission makes history with proposal of lowest pay hike in 70 yrs

New Delhi: The Seventh Pay Commission made history Thursday night by proposing the lowest pay hike for central government employees in 70 years.

Seventh Pay Commission Chairman Justice Ashok Kumar Mathur

Seventh Pay Commission Chairman Justice A K Mathur

The The Seventh Pay Commission recommended raise in basic pay, a key segment that determines several allowances, is only 14.27 per cent – the lowest in 70 years. The previous commission had recommended a 20 per cent hike, which the government doubled while implementing it in 2008.

The Seventh Pay Commission recommended a 23.55 per cent increase in the cumulative earnings of central government employees.

The figure of 23.55 per cent covers the increases in pay and allowances.

The overall increase in pay and allowances and pensions over the business-as-usual scenario will be 23.55 per cent, the report said.

Pay panel proposals“Within this the increase in pay will be 16 per cent, increase in allowances will be 63 per cent and increase in pension would be 24 per cent,” the Finance Ministry said.

A minimum pay of Rs 18,000 per month and a maximum of Rs 2.5 lakh per month has been recommended by the Commission, headed by Justice A K Mathur, that presented its 900-page report to Finance Minister Arun Jaitley.

So that the recommendations submitted to the government show that there is a huge gap between minimum and maximum pay.

The Pay Commission has suggested abolition of the pay band and the grade pay, though it retained the annual increment of 3 per cent.

Grade Pay has been subsumed in the pay matrix. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the pay matrix,” the report says.

It has also recommended a fitment factor of 2.57 which will be applied uniformly to all employees.

The Pay Commission proposed to enhance gratuity ceiling to Rs 20 lakh from Rs 10 lakh. It will be raised by 25 per cent whenever dearness allowance goes up by 50 per cent.

The pay commission introduced health insurance scheme for central government employees and pensioners.

The commission has also proposed to increase insurance cover from Rs 30,000, Rs 60,000 and Rs 1.2 Lakh to Rs 15 Lakh, Rs 25 Lakh and Rs 50 Lakh respectively. Accordingly, monthly deduction will be raised under CGEGIS from Rs 30, Rs 60 and Rs 120 per month to Rs 15,00 Rs 25,00 and Rs 5,000 respectively.

The commission recommended to increase House Building Advance (HBA) to maximum Rs 25 Lakh from 7.5 Lakh

The pay commission has also proposed retirement age of personnel of central paramilitary forces to increase to 60 years from 58 years, One member of the commission dissented from this proposal. It was proposed a status quo on the retirement age for central government employees, 60 years.

The total monetary impact on the central government would be Rs 1.02 lakh crore for the recommendations of the Seventh Pay Commission or it will have 0.65 percent hit on the gross domestic product (GDP).

Download full report of the Seventh Central Pay Commission


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