7th Pay Commission Report: 7 Key Takeaways

The Seventh Central Pay Commission, headed by Justice A K Mathur, submitted its report to Finance Minister Arun Jaitley on November 16, recommending changes in the salaries, allowances and pensions of all the central government employees and pensioners. The government intends to implement the recommendations from January 1, 2016. Pay Commissions are set up on a regular basis to review and make recommendations on the work and pay structure of all civil and military divisions of the government. 

PropGuide lists out seven key takeaways form the commission's 900-page report:

The panel has proposed a 23.55 per cent pay hike for the central government employees. This will cover the 4.7 million working government employees and 5.2 million pensioners.

The increase in pay, rent allowance, other allowances and pension will be 16 per cent, 138.7 per cent, 49.8 per cent and 23.6 per cent, respectively. The rate of annual increment retained will be three per cent.

For implementing these recommendations, the government will have to shell out Rs 1.02 lakh crore. Of this, Rs 73,650 crore will be borne under the Central Budget and Rs 28,450 crore under the Railway Budget.

From Rs 6,600 per month earlier, a minimum pay of Rs 18,000 has been proposed for all entry-level employees. For senior-most civil servants, the pay has been raised from Rs 80,000 to Rs 2.25 lakh a month. For the cabinet secretary rank, the amount would be Rs 2.50 lakh a month.

A total of 52 allowances have been abolished by the panel and another 36 allowances will be subsumed in the existing allowances or in newly proposed allowances.

On the lines of armed forces employees, the commission has proposed One-Rank-One-Pension for civilians, too. The present system of pay bands and grade pay will be replaced with a new pay matrix. Different pay matrices have been chalked out for civilians, defence personnel and for military nursing service.

The commission raises the ceiling of gratuity from the existing Rs 10 lakh to Rs 20 lakh and the ceiling on gratuity may increase by 25 per cent, whenever dearness allowance rises by 50 per cent.