How 7th Pay Commission Will Affect Salaries of Central Government Employees?


Pay Commission has been set up on a regular basis by the Indian Government, since India’s Independence. The first Pay Commission was set up in January 1946 and till date, seven pay commissions have been set up by the government. The pay commission gives recommendations concerning changes in the work and salary structure of all central government employees working in the military and civil division.

The 7th pay Commission was announced on February 4, 2014, after its approval from former Indian Prime Minister Manmohan Singh. The commission is chaired by Justice A.K. Mathur. The Commission also includes Meena Agarwal as secretary, Vivek Rae, retired IAS Officer, and Dr. Rathin Roy members of the Commission.

Salaries under 7th Pay Commission

The recommendations of the 7th Pay Commission have been approved by the Union Cabinet on June 29, 2016. The 7th Pay Commission has introduced the highest and lowest basic salary for central government employees, which are 2.25 lakh rupees and Rs 18000, respectively. The Commission has recommended 23.55% hike in pay with up to 63 % increase in allowances and 16% increase in basic salary, 24% hike in pension and 3% annual increment for central government employees. The hike recommended shows the massive positive change in the salaries of central government staffers from the 6th Pay Commission to the 7th Pay Commission.

The 7th Pay Commission will benefit almost 55 lakh pensioners and 48 lakh central government staffers. The Commission has proposed One Rank One Pension (OROP) for civilian government staffers on the line of OROP for armed forces. Other approved recommendations include:

  • Introduction of a Health Insurance Scheme.
  • Upsurge in Military Service Pay.
  • Short service commissioned officers can exit the armed forces any time between 7 to 10 years of their service.
  • The upper limit of gratuity has been increased from 10 lakh rupees to 20 lakh rupees.
  • Allowances concerning Risk and Hardship will be governed by the recently proposed nine-cell Risk and Hardship Matrix.
  • A fitment factor of 2.57 will be applicable uniformly to all central government employees.
  • It suggested closure of all non-interest bearing advances and enhanced the limit for interest-bearing advances for home purchasing from 7.5 lakh to 25 lakh rupees.
  • It also recommended Systemic change in the Cadre Review process for Group A officers.
  • It recommends, House Rent Allowance (HRA) to be paid at the rate of 8 %, 16%, and 24 % of the new Basic Pay for Class Z, Y, and X cities respectively. The rate of the HRA will be revised to 9%, 18%, and 27 % respectively when DA exceeds 50 percent.
  • Performance Related Pay (PRP) introduced for all categories of Central Government staffers, based on quality Annual Performance Appraisal Reports and Results Framework Documents.
  • It recommended martyr status for CAPF personnel in case of death in the line of duty, at par with the defence forces personnel.

The Bottom Line 

The 7th Pay Commission will bring a great hike to the salaries of the central government employees. Not just this, it does impact the salaries of individuals into state government jobs. The article discusses all the important recommendations of the 7th Pay Commission that you must know.

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