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7th Pay Commission: All you need to know

  • Highlights

  • India has witnessed 7 Pay Commissions until now

  • The 7th Pay Commission will work on Fitment Formula

  • The Pay Matrix system is still to be implemented

  • Most states in India have adopted 7th Pay Commission

The Government of India has put the Pay Commission in place as an advisory body who recommends and advices it regarding the salary structure of its employees. Since 15th August 1947, a total of 7 Pay Commissions have been set up to review the pay structure for all government employees, engaged in both the civil and military divisions of the country.
The Commission is headquartered in Delhi and once the recommendations are brought to the table, they are given 18 months to act upon the alterations. Here is all you need to know about the latest and the 7th Pay Commission.

An introduction to 7th Pay Commission

P. Chidambaram, the then Finance Minister of India, on 25th September, 2013 announced the 7th Pay Commission, which was approved by the then Prime Minister, Manmohan Singh. It was decided that it will be executed by January 2016. However, the 7th Pay Commission was not rolled out within the designated timeline due to hurdles along the way.
Justice AK Mathur heads the 7th Pay Commission and under his supervision the latest report was submitted in 2016. This report suggested a 23.55% hike in pay and allowances of government employees. However, followed by this recommendation, the armed forces have requested a revision in their pay scale, pension, salary facilities, etc., which is not yet been finalised.
As of now, President Ram Nath Kovind has agreed upon the suggestion of increasing the monthly salary of the Chief Justice of India to Rs.2.80 lakh per month from the present Rs.1 lakh, and recommended a salary hike for the Supreme Court and High Court judges. The latest news mentions that the revised salary structures for other government employees will be implemented for action under the 7th Pay Commission soon.

What were the recommendations of the 7th Pay Commission?

As per the 7th Pay Commission, the major recommendations suggested after rounds of scrutiny is as follows.
Minimum pay for government employees: For newly recruited government employees at entry level, the salary is to be increased from Rs.7,000 to Rs.18,000 per month. For newly recruited Class I Officesr, the minimum salary is to be increased to Rs.56,100 per month.
Maximum pay for government employees: To increase the maximum pay for government employees to Rs.2.25 lakh per month for Apex Scale and Rs.2.5 lakh per month for Cabinet Secretary and others working at the same level.
Pay Matrix: Considering the anomalies of the Grade Pay Structure, a new pay matrix has been recommended. Once implemented, the status of a government employee will be decided by their level in the new Pay Matrix.
Work Related Illness and Injury Leave (WRIIL): Recommendation for full pay and allowances for all employees hospitalised due to WRIIL.
Fitment: The Commission recommends a uniform Fitment Factor to eliminate partiality and discrimination among ranks. The Fitment Factor has been decided at 2.57 for all employees. As per latest news, government employees have demanded for a hike in the factor and want it to be 3.68.
Dearness Allowance: A 2% increase in this parameter has been decided upon with the Commission agreeing on a 7% yearly hike.
Annual increment: The recommendation is to retain the annual increment of 3% every year.
Modified Assured Career Progression (MACP): The performance benchmark of MACP has been altered from “Good” to “Very good”. It is further recommended that there be no annual increments and promotions for employees who do not meet this performance level.
Military Service Pay (MSP): To pay MSP to all individuals in military service in India. This is applicable for all ranks inclusive of Brigadiers and people at similar higher designations.
Allowances: The Commission has abolished 51 allowances out of 196 allowances making the number stand at 37 allowances.
House Rent Allowance: The Commission has recommended a 24% increase for HRA. HRA will increase to 27%, 18%, and 9% when DA (dearness allowance) crosses 50%.
Advances: Employees can only take non-interest advances for personal computers and house building. Also, the advance amount for building home has been increased from Rs.7.5 lakh to Rs.25 lakh.
Central Government Employees Group Insurance Scheme (CGEGIS): Recommended rates for insurance schemes are.

Level of Employee Present monthly deduction Present insurance amount Recommended monthly deduction Recommended insurance amount
10 and above Rs.120 Rs.1,20,000 Rs.5000 Rs.50,00,000
6 to 9 Rs.60 Rs.60,000 Rs.2500 Rs.25,00,000
1 to 5 Rs.30 Rs.30,000 Rs.1500 Rs.15,00,000

Medical alterations: The Commission has recommended a cashless health insurance scheme for Central Government employees and pensioners.
Pension: The Commission is likely to bring uniformity between existing pensioners and current retirees in terms of the pension they receive. This will be determined based on the Pay Matrix system and the number of increments a pensioner has earned to reach the level in which they have retired. For example, the Madhya Pradesh Cabinet accepted the Seventh Pay Commission recommendation to increase the pension amount by 2.57 times, benefitting 4.39 lakh pensioners.
Gratuity: The Commission seeks to increase the ceiling of gratuity from the presentRs.10 lakh to Rs.20 lakh.
Disability Pension for Armed Forces: Recommendation for a slab-based system for disability pension has been put forward by the Commission.

Why was the 7th Pay Commission constituted?

As per the rules set in motion by the Indian Government, Pay Commissions are brought to action every 10 years. This allows for the revision of on-going allowances, salary slabs, privileges, insurance categories, and special advance facilities, etc., for the government employees on a timely basis. The recommendations put forward have a direct parity with the current market scenario, cost of rupee, inflation rates, and higher costs of living.
In line with the other Pay Commissions, the 7th Pay Commission was formed under the leadership of Chairman Justice Ashok Kumar Mathur in 2014, when the Manmohan Singh led UPA government was at the centre. The 7th Pay Commission was constituted keeping in mind the economic situation of the country then, financial resources of the government, and the well-drawn out comparison between the public sector, private sector and state government pay structure.

Who is the 7th Pay Commission applicable to?

The 7th Pay Commission, much like all its predecessors, is applicable to government employees including those employed in individual state government roles and the ones working with the central government. So, employees of the Indian Air Force, Defence and Army, Anganwadi workers, security guards and clerks in government offices, professors in government universities and colleges, individuals working in government banks and PSUs, assistant station master, Indian Railways staff, BPCL employees, BSF employees, IAS and IFS officers, and many more will experience the benefits of the 7th Pay Commission.

How has the Rank Pay Scheme been affected by the 7th Pay Commission?

Once the 7th Pay Commission is implemented, the Rank Pay Scheme that was prevailing from the earlier Pay Commissions will be dissolved. As per the new calculations according to the Pay Matrix, a Fitment Factor will be multiplied to your existing Pay (i.e. Pay in Pay band + Grade Pay). This new formula dismissing the earlier Rank Pay formula is being referred to as the Fitment formula for 7th Pay Commission. As recommended, a minimum factor of 3.0 is being tussled upon for Fitment. This will finally get decided once the 7th Pay Commission is implemented, as the employees are requesting a revised rate of 3.68.

7th Pay Commission for Central Government Employees

Once the 7th Pay Commission is implemented, the Central Government employees will face a revision in their salaries. The revised and new amounts will be determined in lieu of a matrix system that has been named the Pay Matrix, which as stated earlier, will replace the Grade Pay system used until now. You can see the Pay Matrix table for the Central Government Employees here.

How to calculate revised salary under the 7th Pay Commission?

In case you want to access the calculation on your own, you can visit the 7th Pay Commission website and calculate your total salary/pay package by following these simple steps:
- Head to the calculator on the website and feed in your Basic Pay amount as of present along with your existing Pay Band and Grade Pay.
- Now, read the Commission recommendations, and choose your transport allowance, city, and your current HRA.
- Finally click on ‘Calculate’, and you will immediately see your revised package and salary based on the new Pay Commission norms.

States that have adopted the 7th Pay Commission

The states which are under BJP ruling have agreed to adopt the 7th Pay Commission policy changes. These include Arunachal Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Manipur, Rajasthan, Uttar Pradesh, Uttarakhand, Andhra Pradesh, Bihar, Jammu and Kashmir, Sikkim, Tripura and Nagaland. Karnataka and Meghalaya are likely to join the brigade within a couple of months too.

When will the 7th Pay Commission be implemented?

Earlier, during the budget broadcast, it was announced that by July 1, 2018 the 7th Pay Commission will be implemented to benefit government employees. However, amidst a round of debate, it is likely that the Commission will be implemented only by August 2018. However, the government has not spoken a word regarding the arrears due to the delay in implementation.

It is still time until the 7th Pay Commission is brought to action by the Centre and all state governments. Further, the Modi Government has implied that the 7th Pay Commission will be the last of its kind, as it plans to consider alternatives for revising salaries in the future. Instead of following the 10-year timeline, pay matrices in the future may be altered as per the Aykroyd formula, taking commodity prices into consideration. So, equipped with all this information about the changes you can expect, just keep a watch on the 7th Pay Commission website to keep abreast with the latest news.

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