7th Central Pay Commission

Introduction 

Government of India appointed Seventh Central Pay Commission under chairmanship of Justice Shri Ashok Kumar Mathur in 2014. 

Term of Reference 

• To examine, review, evolve and recommend changes that are desirable and feasible regarding the principles that should govern the emoluments structure including pay, allowances and other facilities/ benefits, in cash or kind, having regard to rationalization and simplification therein as well as the specialized needs of various Departments, agencies and services of Centre. 

• To work out the framework for an emoluments structure linked with the need to attract the most suitable talent to Government service, promote efficiency, accountability and responsibility in the work culture, and foster excellence in the public governance.

• To make recommendations on bonus, incentives and pensions. 

Recommendations 

• 3.55 per cent increase in pay and allowances recommended, Recommendations to be implemented from January 1, 2016. 

• Minimum pay fixed at Rs 18,000 per month; maximum pay at Rs 2.25 lakh, the rate of annual increment retained at 3per cent and 24 per cent hike in pensions. 

• One Rank One Pension proposed for civilian government employees on line of OROP for armed forces. 

• 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.  

• The present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix is recommended by the Commission. 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.

 • Existing Performance benchmarks for MODIFIED ASSURED CAREER PROGRESSION (MACP) is “Good”. 7th Pay Commission proposes that it should be “Very Good”. 10 years, 20 years and 30 years Slab continues. 

• The Commission has also proposed that annual increments not be granted in the case of those employees who are not able to meet the benchmark either for MACP or for a regular promotion in the first 20 years of their service. 

• Military Service Pay (MSP), which is a compensation for the various aspects of military service, will be admissible to the defence forces personnel only. 

• Short service commissioned officers will be allowed to exit the armed forces at any point in time between 7 to 10 years of service 

• Commission recommends abolishing 52 allowances; another 36 allowances subsumed in existing allowances or in newly proposed allowances. Recommendations will impact 47 lakh serving govt employees, 52 lakh pensioners, including defence personnel. Financial impact of implementing recommendations will be Rs 1.02 lakh crore – Rs 73,650 crore to be borne by Central Budget and Rs 28,450 crore by Railway Budget. 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