Pay panel for 23.5 % hike, to cost govt. Rs 1.02 lakh cr

: In its report submitted to Finance Minister Arun Jaitley on Thursday, the Seventh Central Pay Commission has recommended an overall increase of 23.55 per cent in pay, allowances, and pension for government employees.

Within this, the Commission’s report recommends a 16 per cent increase in basic pay, a 63 per cent increase in allowances and a 24 per cent hike in pension. The recommendations are to come into force on January 1, 2016.

“This will impact 47 lakh employees and 52 lakh pensioners. The total monetary impact on the central government would be Rs 1.02 lakh crore. Around Rs 74,000 crore would be the impact on the Union Budget and Rs 28,000 crore on the Railway Budget,” Mr. Jaitley said at his residence after he received the report from Justice A.K. Mathur, Chairperson of the Commission. Mr Jaitley said the impact of the recommendations amounts to 0.6 per cent of GDP, adding that while the government would review the report soon, the State governments would take their own view on it.

“Considering the issues raised regarding the Grade Pay structure and with a view to bring in greater transparency, the present system of pay bands and grade pay has been dispensed with and a new pay matrix has been designed. Grade Pay has been subsumed in the pay matrix. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the pay matrix,” the report says.

“Based on the Aykroyd formula, the minimum pay in government is recommended to be set at Rs. 18,000 per month and Rs. 2,25,000 per month for Apex Scale and Rs. 2,50,000 per month for Cabinet Secretary and others presently at the same pay level,” the report said.

Towards this end, the report recommends that a fitment factor of 2.57 to be applied uniformly for all employees. That is, employees will see their pay increase by 2.57 times in a one-time increase to bring uniformity to the new pay matrix, Justice Mathur said. The report also recommends an annual increment of 3 per cent in basic pay.

OROP for all

Significantly, the report has recommended a one-rank one-scheme for all government employees, including military personnel. who have retired before January 1, 2016. This formulation will bring parity between past pensioners and current retirees for the same length of service in the pay scale at the time of retirement.

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