Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
mains Test Series 2018
7th Pay Commission Recommends 23.5% Hike
Nov 21, 2015

The 7th Pay Commission headed by Justice A K Mathur submitted its report to Union Finance Minister, recommending a 23.55 per cent increase in salary, allowances and pension for nearly 47 lakh central government employees and 52 lakh pensioners.  The recommended 23.55% increase in remuneration for central government employees, if fully implemented, would have a significant impact on the government's wage bill.

The suggested wage increase by the 7th Pay Commission would come into effect at the beginning of the 2016 calendar year. The recommended increase is less than the 40% that was implemented after the last commission in 2008.

Key Recommendations

  • The new pay structure will be implemented from January 1, 2016, which means the government will have no arrears to pay.

  • 16 per cent hike in basic pay, 63 per cent rise in allowances.

  • Annual increment constant at 3 per cent. 52 allowances have been abolished, while another 36 have been merged with existing allowances.

  • The maximum salary under the new policy would be Rs 2.5 lakh per month, Rs 18,000 to be the minimum pay. In the 6th pay commission, the maximum was Rs 90,000, while the minimum pay was Rs 6,600.

  • The actual hike, however, is more modest because there has been a 119 per cent hike in Daily Allowance since the 6th pay commission was implemented ten years ago.

  • Insurance amounts in group insurance raised massively to up to Rs 50 lakh. Premium deduction set to rise.

  • 24 per cent rise in pension to Rs 1,76,300 crore, an increase of Rs 33,700 crore.

  • Virtual one-rank-one-pension for civilian employees and paramilitary staff too.

  • Heads of regulatory bodies dealing with telecom, capital and futures market, insurance, power and airports to get a consolidated pay of Rs 4.50 lakh per month.

  • 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.

  • Cabinet Secretary to get Rs 2.5 lakh as against Rs 90,000 per month pay band currently.

  • Significant rise in the Military Service Pay (MSP), which is a compensation for various aspects of military service.

  • 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.

  • In order to make armed forces more attractive to the youth, the panel has proposed gratuity and a fully-funded one-year course at premier institutions like the IITs and the IIMs.

  • Short service commissioned officers now allowed to exit Army at any point in time between 7-10 years of service.

  • Performance-linked incentives, as is the practice in the private sector, has also been suggested for the central government employees.

  • No more interest-free loans for the central government employees.

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

  • Total impact of Commission’s recommendation to raise the ratio of expenditure on salary and wages to GDP by 0.65 percentage points to 0.7 per cent.


Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.

http://www.drishtiias.com/upsc-current-affairs-article-7th-Pay-Commission-Recommends-23.5-Hike-