Cabinet Approves 7th Pay commission

New Delhi: The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the implementation of the recommendations of 7^th Central Pay Commission (CPC) on pay and pensionary benefits.. With the cabinet clearance, over one crore employees ( 47 lakh employees and 53 pensioners) that are working with the central government can expect a higher pay packages. Recommendations of 7th CPC on pay and pensionary benefits will come into effect from 01.01.2016.

Since the complete set of documents are yet to be released by the ministry, the implications of the 7th CPC on medical fraternity are still not clear. 

Medical Dialogues Team will keep the medical practitioners updated on the same, as soon as they are out.

In the meantime, here are some general salient features of the pay commission as per the announcements by the Finance Minister and the finance secretary:-

• 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.


• 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.


• 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.


• 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. After taking into account the DA at prevailing rate, the salary/pension of all government employees/pensioners will be raised by at least 14.29 % as on 01.01.2016.


• 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 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 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.


• 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.


• 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 and having representations from other ministries 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.


• The Cabinet 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.


• 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.