Friday, November 20, 2015

Good news for PSU employees: 7th Pay Commission recommends 23.55% hike

Chairman of the 7th Pay Commission submitted its report to FM on Nov 19
IN A big post Diwali bonanza, the seventh central pay commission on November 19 recommended a 23.55 per cent hike in the cumulative earnings of serving and retired central government employees, saddling the Union government with a bill of Rs 1.02 lakh crore in the next financial year. The figure of 23.55 per cent covers the increases in pay, allowances and pension.
However, the recommended raise in basic...
pay is only 14.27 per cent – the lowest in 70 years. The basic pay determines various allowances. The previous commission had recommended a 20 per cent hike, which the government doubled while implementing it in 2008.
The gratuity ceiling will be enhanced to Rs 20 lakh from Rs 10 lakh. It will be raised by 25 per cent whenever dearness allowance goes up by 50 per cent.
The recommendations of the pay commission will come into effect from January 1, 2016.
The pay commission, headed by Justice A.K. Mathur, submitted its 900-page report to Union finance minister Arun Jaitley at his residence. A secretariat headed by the expenditure secretary will study the report before the government takes the final decision. Normally, the government doesn’t reject the commission’s recommendations.
The Union budget will have to set aside Rs 73,650 crore and the railway budget Rs 28,450 crore to meet the pay increase if the government accepts the recommendations without any change.
Highlights of Recommendations
Recommended Date of implementation: 01.01.2016
Minimum Pay: Based on the Aykroyd formula, the minimum pay in government is recommended to be set at Rs 18,000 per month.
Maximum Pay: 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.
Financial Implications:
The total financial impact in the FY 2016-17 is likely to be Rs.1,02,100 crore, over the expenditure as per the ‘Business As Usual’ scenario.  Of this, the increase in pay would be Rs.39,100 crore, increase in allowances would be Rs. 29,300 crore and increase in pension would be Rs.33,700 crore.
Out of the total financial impact of Rs.1,02,100 crore, Rs.73,650 crore will be borne by the General Budget and Rs.28,450 crore by the Railway Budget.
In percentage terms the overall increase in pay & allowances and pensions over the ‘Business As Usual’ scenario will be 23.55 percent. Within this, the increase in pay will be 16 percent, increase in allowances will be 63 percent, and increase in pension would be 24 percent.
The total impact of the Commission’s recommendations are expected to entail an increase of 0.65 percentage points in the ratio of expenditure on (Pay+Allowances+ Pension) to GDP compared to 0.77 percent in case of VI CPC.
New Pay Structure: 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.
Fitment: A fitment factor of 2.57 is being proposed to be applied uniformly for all employees.
Annual Increment: The rate of annual increment is being retained at 3 percent.
Modified Assured Career Progression (MACP):
Performance benchmarks for MACP have been made more stringent from “Good” to “Very Good”.
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.
No other changes in MACP recommended.
House Rent Allowance: Since the Basic Pay has been revised upwards, the Commission recommends that HRA be paid at the rate of 24 percent, 16 percent and 8 percent of the new Basic Pay for Class X, Y and Z cities respectively. The Commission also recommends that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent respectively when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.
In the case of PBORs of Defence, CAPFs and Indian Coast Guard compensation for housing is presently limited to the authorised married establishment hence many users are being deprived. The HRA coverage has now been expanded to cover all.
Any allowance not mentioned in the report shall cease to exist.
Emphasis has been placed on simplifying the process of claiming allowances.
All non-interest bearing Advances have been abolished.
Regarding interest-bearing Advances, only Personal Computer Advance and House Building Advance (HBA) have been retained. HBA ceiling has been increased to Rs.25 lakhs from the present Rs.7.5 lakhs.
Medical Facilities:
Introduction of a Health Insurance Scheme for Central Government employees and pensioners has been recommended.
Pension: The Commission recommends a revised pension formulation for civil employees including CAPF personnel as well as for Defence personnel, who have retired before 01.01.2016. This formulation will bring about parity between past pensioners and current retirees for the same length of service in the pay scale at the time of retirement.
Gratuity: Enhancement in the ceiling of gratuity from the existing Rs.10 lakh to Rs.20 lakh. The ceiling on gratuity may be raised by 25 percent whenever DA rises by 50 percent.


  1. Not for PSU.....and PSU SLAVES (sick psu)

  2. It is a great news for all the Central & State Govt employees as well as the CPSEs where the employees will get pay package as per 7th CPC.
    But Will Govt pay attention to those PSUs where the people are getting 1992 Pay scale but doing their best to achieve Excellent MOU rating year after year? Closing of BPRPSE is a justified thing as it did not do much for reviving the ailing PSUs. Such a PSU is HSCL under Ministry of Steel which is pending for Restructuring for the last 15 years. Recently there has been a development to merge this Central PSU with NBCC . HSCL having a very minimum of manpower liability and order booking in hand , excellent MOU rating could be taken over by any major PSU. The employees are suffering for a long time in spite of giving their best. Matter if taken up by PMO could yield an early result or otherwise the Company will better want to gladly run by retired employees without any proper organisational infrastructure.

    1. Govt should at least make it public the fate of these ailing PSUs. Dragging the files year after year without yielding any result is unfortunate.

  3. This increase would directly come from the tax payers pockets(close to Rs.5000 per person in India).
    I found a petition protesting this:

  4. Govt simply wastes about Rs 40,000 crore in the name of MANREGA. The amount is all looted and no productive work is done.

  5. GOI has no sense of equally leaving among every employees of CG/SG/PSU/Private sectors. This so called revise of salary after every 10th years of only CG employees had create a very vast indifferent of living standard between every working employees under different establishment in India. CG employees salary had been kept increasing period after the period of eery Ten years, but employees of SG's and PSU as well private sectors were kept in a same structure of 10 or 20 years before.

    This will never bring any equivalent standard of life among us in every society within India. The people who served at CG sectors will kept richer and richer year after year and others will remain as it is. Of-course yes, some SG in India have enough resource of fund to compete the CG employee's rule of salary hike but not all.

    This system need to be address in order to finish the race of inequalities among us. GOI should brought out an alternative means to tackle this issues otherwise India will remain as underdevelopment due to social inequalities among every citizens. The poorer people will remain as poorer and poorer day by day and the richer will become richer and richer day by day, year after years.

    GOI can hold this system of salary hike for at least for a decade of years and the fund which meant for hike of salary only for CG employees can be granted to SG as well PSU and Private sectors employees to cop up the gape among CG employees anf others employees. What is the different between CG employees and others employees? Is it of different of quality of service or can GOI termed the only CG employees are best from others?

  6. Is 7 pay commission is applicable for coal india employee ?

  7. what about nationalised bank employees will their gratuity be enhanced upto 20 lacs

  8. My current basic pay in MTNL ( which is a Navratna PSU) is 26560. what will be my basic pay after implementation of 7th CPC. Do my basic pay also multiplied by 2.57 factor to calculate a revised basic pay.

  9. When the amendment for increasing the limit upto ₹ 20/-for payment of gratuity act will be issued

  10. When the amendment for increasing the limit upto ₹ 20/-for payment of gratuity act will be issued