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.
