The Union Cabinet chaired by the Prime
Minister Shri Narendra Modi has approved the implementation of the
recommendations of 7th Central Pay Commission (CPC) on pay and pensionary
benefits. It will come into effect from 01.01.2016.
In the past, the employees had to wait for
19 months for the implementation of the Commission’s recommendations at the
time of 5th CPC, and for 32 months at the time of implementation of 6th CPC.
However, this time, 7th CPC recommendations are being implemented within 6
months from the due date.
The Cabinet has also decided that arrears of
pay and pensionary benefits will be paid during the current financial year (2016-17) itself, unlike in the past when parts of
arrears were paid in the next
financial year.
The recommendations will benefit over 1
crore employees. This includes over 47 lakh central government employees and 53
lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the
defence forces.
Highlights:
1. The present system of Pay Bands and
Grade Pay has been dispensed with and a new Pay Matrix as recommended by the
Commission has been approved. 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.
2. All existing levels have been subsumed
in the new structure; no new levels have been introduced nor has any level been
dispensed with. Index of Rationalisation has been approved for arriving at
minimum pay in each Level of the Pay Matrix depending upon the increasing role,
responsibility and accountability at each step in the hierarchy.
3. The minimum pay has been increased from Rs. 7000
to 18000 p.m. Starting salary of a newly recruited
employee at lowest level will now be Rs. 18000 whereas for a freshly recruited
Class I officer, it will be Rs. 56100. This reflects a compression ratio of
1:3.12 signifying that pay of a Class I officer on direct recruitment will be
three times the pay of an entrant at lowest level.
4. For the purpose of revision of pay and
pension, a fitment
factor of 2.57 will be applied across all
Levels in the Pay Matrices. After taking into account the DA at prevailing
rate, the salary/pension of all government employees/pensioners will be raised
by at least 14.29 % as
on 01.01.2016.
5. Rate of increment has been retained
at 3 %. This will benefit the employees in future on account
of higher basic pay as the annual increments that they earn in future will be
2.57 times than at present.
6. The Cabinet approved further
improvements in the Defence Pay Matrix by enhancing Index of Rationalisation
for Level 13A (Brigadier) and providing for additional stages in Level 12A
(Lieutenant Colonel), 13 (Colonel) and 13A (Brigadier) in order to bring parity
with Combined Armed Police Forces (CAPF) counterparts at the maximum of the
respective Levels.
7. Some other decisions impacting the
employees including Defence & Combined Armed Police Forces (CAPF) personnel
include :
· Gratuity ceiling enhanced from Rs. 10 to
20 lakh. The ceiling on gratuity will increase by 25 %
whenever DA rises by 50 %.
· A common regime for payment of Ex-gratia lump sum compensation for civil and
defence forces personnel payable to Next of Kin with the existing rates
enhanced from Rs. 10-20 lakh to 25-45 lakh for different categories.
· Rates of Military Service Pay revised from Rs. 1000, 2000, 4200 & 6000 to
3600, 5200, 10800 & 15500 respectively for various categories of Defence
Forces personnel.
· Terminal gratuity equivalent of 10.5 months of reckonable emoluments for
Short Service Commissioned Officers who will be allowed to exit Armed Forces
any time between 7 and 10 years of service.
· Hospital Leave, Special Disability Leave and Sick Leave subsumed into a
composite new Leave named ‘Work Related Illness and Injury Leave’ (WRIIL). Full
pay and allowances will be granted to all employees during the entire period of
hospitalization on account of WRIIL.
8. The Cabinet also approved the
recommendation of the Commission to enhance the ceiling of House Building
Advance from Rs. 7.50 lakh to 25 lakh. In order to ensure that no hardship is
caused to employees, four interest free advances namely Advances for Medical
Treatment, TA on tour/transfer, TA for family of deceased employees and LTC
have been retained. All other interest free advances have been abolished.
9. The Cabinet also decided not to accept the steep
hike in monthly contribution towards Central Government Employees Group
Insurance Scheme (CGEGIS)
recommended by the Commission. The existing rates of monthly contribution will
continue. This will increase the
take home salary of employees at lower levels by Rs. 1470. However, considering
the need for social security of employees, the Cabinet has asked Ministry of
Finance to work out a customized group insurance scheme for Central Government
Employees with low premium and high risk cover.
10. The general recommendations of the
Commission on pension and related benefits have been approved by the Cabinet.
Both the options recommended by the Commission as regards pension revision have
been accepted subject to feasibility of their implementation. Revision of
pension using the second option based on fitment factor of 2.57 shall be implemented immediately. A
Committee is being constituted to address the implementation issues anticipated
in the first formulation. The first formulation may be made applicable if its
implementation is found feasible after examination by proposed Committee which
is to submit its Report within 4 months.
11. The Commission examined a total of 196
existing Allowances and, by way of rationalization, recommended abolition of 51
Allowances and subsuming of 37 Allowances. Given the significant changes in the
existing provisions for Allowances which may have wide ranging implications,
the Cabinet decided to constitute a Committee headed by Finance Secretary for
further examination of the recommendations of 7th CPC on Allowances. The Committee will complete its work in a time
bound manner and submit its reports within a period of 4 months. Till a final decision, all existing Allowances
will continue to be paid at the existing rates.
12. The Cabinet also decided to constitute
two separate Committees (i) to suggest measures for streamlining the
implementation of National Pension System (NPS) and (ii) to
look into anomalies likely to arise
out of implementation of the Commission’s Report.
13. Apart from the pay, pension and other
recommendations approved by the Cabinet, it was decided that the concerned
Ministries may examine the issues that are administrative in nature, individual
post/ cadre specific and issues in which the Commission has not been able to
arrive at a consensus.
14. As estimated by the 7th CPC, the
additional financial impact on account of implementation of all its
recommendations in 2016-17 will be Rs. 1,02,100 crore. There will be an
additional implication of Rs. 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16.
