The Seventh Pay Commission headed by Justice AK Mathur has recently submitted its 900-page report to Finance Minister Mr. Arun Jaitley, suggesting around 23% hike in pay and allowances of the central government employees and pensioners. The pay commission has overall proposed an increase of 16% in pay, 63% in allowances and 24% in pensions.
Additional financial burden on the central government coffers in 2016-17 will be over Rs.1 trillion, of which Rs. around 73,000 crore will come from the general budget, and the remaining from the Indian railway budget. Expenditure on HRA is likely to go up to around Rs. 29,500 crore from the present Rs. 12,400 crore and on allowances by about Rs. 29,300 crore. On pensions, the expenditure will be Rs 176,300 crore, reflecting an increase of around Rs. 33,700 crore, most of it on account of one rank one pension (OROP) scheme announced for the army personnel.
The entry level pay has been recommended to be raised to Rs 18,000 per month from current monthly pay of Rs 7,000, while the maximum pay, drawn by the Cabinet Secretary, has been fixed at Rs 2.5 lakh per month from current maximum monthly pay of Rs 90,000.
The panel has also suggested abolition of the pay band and the grade pay structure, though it has retained the annual increment of 3-percent. The Commission has also recommended introduction of the Performance Related Pay (PRP) for all categories of Central Government employees. Introduction of a health insurance scheme for employees and pensioners is also recommended by the pay panel.
Speaking on the recommendations, the finance minister said, a secretariat will be set up to implement the pay panel recommendations. A separate empowered committee of various departments will also examine the suggestions of the panel.
This move is expected to benefit around 4.8 million staffers and 5.5 million pensioners in the country. The hike will be effective from January 1, 2016.
The Indian government usually accepts the broad proposals for pay revision — due every 10 years.