7th Pay Commission: 10 things you should know about it

The Union Cabinet chaired by Prime Minister Narendra Modi has approved the much-awaited 7th Pay Commission recommendations, on Wednesday.

Earlier, for implementing the 5th Pay Commission, it took 19 months and for 6th Pay Commission, the employees had to wait for 22 months. 

Here are 10 things you need to know about 7th Pay Commission:

1. Pay Bands and Grade Pay: As per the official website, 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.

In the new structure, all existing levels have been subsumed and no new level has been included. 

2. Minimum pay hike: Under this, the minimum pay of central employees has been hiked from Rs 7000 to Rs 18000 per month. So, Rs 18000 will be the starting salary of newly recruited at lowest level and it will be Rs 56,100 for freshly recruited Class 1 officer.

This shows that the pay of Class 1 officer on direct recruitment will be three times the pay of an entrant at lowest level, said the official website.

3. Fitment factor: The official site stated that, "fort he 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".

4. Additional burden: The additional impact on account of implementation of all its recommendations will be Rs 1,02,000 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.

According to the recommendations, out of the total financial impact of Rs 1,02,100 crore, Rs 73,650 crore will be borne by the Union Budget and Rs 28,450 crore by the Railway Budget.

5. Employees- 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.

6. House Building Advance: The commission to enhance House Building Advance from Rs 7.5 lakh to Rs 25 lakh. 

7. Defence Pay Matrix- As per the official report, 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.

8. Group insurance scheme: As recommended by the 7th Pay Commission, no deduction for group insurance scheme from salary.

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.

9. Gratuity ceiling enhanced from Rs. 10 to 20 lakh. The ceiling on gratuity will increase by 25 % whenever DA rises by 50 %.

Rates of Military Service Pay revised from Rs. 1000, 2000, 4200 & 6000 to 3600, 5200, 10800 & 15500 respectively for various categories of Defence Forces personnel.

10. Other issues: 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, said the official report.