The Union Cabinet has approved the implementation of the recommendations of 7th Central Pay Commission (CPC) on pay and pension benefits. It will come into effect from January 1, 2016.
The Cabinet also decided that arrears of pay and pensionary benefits will be paid during the current financial year (2016-17) itself. Union Finance Minister Arun Jaitley said the BJP-led NDA government had approved the Seventh Pay Commission’s recommendations in a record time of six months as against the previous governments who had taken 19 and 32 months to implement the recommendations of the Fifth and Sixth Pay Commissions. He expressed the hope that with the implementation of the pay panel’s recommendations there would be more money supply in the economy that would spur the demand and growth. At the same time, he said, employees would also be attracted to opt for additional savings.
With this decision, 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.
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.
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.
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.
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.
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.
Some other decisions impacting the employees including Defence & Combined Armed Police Forces (CAPF) personnel include enhancement of gratuity ceiling 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 will be 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 has been revised from Rs. 1000, 2000, 4200 & 6000 to 3600, 5200, 10800 & 15500 respectively for various categories of Defence Forces.
Hospital Leave, Special Disability Leave and Sick Leave have been subsumed into a composite new Leave named â€˜Work Related Illness and Injury Leaveâ€™ (WRIIL). Full pay and allowances will be granted to all employees during the entire period of hospitalization on account of WRIIL.
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.
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 Commissionâ€™s Report.
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.”