7TH PAY COMMISSION

What is the seventh pay commission?

The 7th Pay Commission, officially known as the “Central Pay Commission,” was constituted by the Government of India in 2013 to review and recommend changes to the salaries and pensions of central government employees. The commission, headed by retired Supreme Court Justice Ashok Kumar Mathur, submitted its report in November 2015, which was implemented in stages from January 2016.

The recommendations of the 7th Pay Commission were aimed at revising the salaries and pensions of over 50 lakh central government employees and 58 lakh pensioners. The commission’s report covered 47 lakh serving employees in various departments of the central government, including railways, posts, defence, and civilian employees of the Union government.

The 7th Pay Commission was set up after a gap of 10 years since the previous pay commission was formed in 2006. The commission was mandated to examine the existing pay structure, allowances, and benefits of central government employees, including armed forces personnel, and make recommendations on their revision.

The commission was asked to keep in mind the economic conditions of the country, the need to attract and retain talent in the government, and the fiscal constraints faced by the government. It was also asked to suggest measures to improve the productivity of government employees and ensure better delivery of public services.

The commission held several rounds of consultations with various stakeholders, including employees’ associations, trade unions, and experts, before finalizing its recommendations. The commission’s report was based on a comprehensive analysis of the current pay structure and benefits available to government employees, as well as international best practices.

The recommendations of the 7th Pay Commission were broadly based on the principle of “equal pay for equal work” and aimed at bringing parity in pay scales across various levels of government employment. The commission recommended an average increase of 23.55% in the salaries of central government employees.

The recommendations of the commission were implemented in two stages. The first stage was implemented in January 2016 and the second stage was implemented in July 2017. The recommendations of the commission have also been extended to employees of autonomous bodies, universities, and public sector undertakings (PSUs) that are funded by the central government.

The following are the key recommendations of the 7th Pay Commission:

1. Increase in Pay and Allowances: The commission recommended an average increase of 23.55% in the salaries of central government employees. This increase includes a 16% increase in pay, 63% increase in allowances, and a 24% increase in pensions. The pay hike was aimed at bringing parity in pay scales across various levels of government employment.
2. Performance-based Appraisal: The commission recommended that the performance of government employees be evaluated based on a system of annual performance appraisal reports (APARs). The commission also suggested the introduction of a performance-related pay (PRP) system, which would link pay and allowances to performance.
3. Rationalization of Allowances: The commission recommended the rationalization of allowances available to government employees. It recommended the abolition of 51 allowances and the merging of 36 allowances with existing ones. The commission also recommended the introduction of new allowances such as leave travel concession (LTC) for domestic travel, educational allowances, and hostel subsidies.
4. New Pay Matrix: The commission recommended the introduction of a new pay matrix, which would have 18 levels instead of the existing 24. The new pay matrix would have higher entry-level salaries for new recruits and would also provide for faster career progression.
5. Enhancement of Gratuity and Commutation: The commission recommended the enhancement of the ceiling on gratuity from Rs. 10 lakh to Rs. 20 lakh and the restoration of commutation of pension after 15 years of retirement.
6. Introduction of Health Insurance Scheme: The commission recommended the introduction of a health insurance scheme for central government employees and pensioners. The scheme, called the Central Government Health Scheme (CGHS), provides cashless medical treatment and reimbursement of medical expenses for government employees and pensioners.
7. Increase in Military Service Pay: The commission recommended an increase in the military service pay (MSP) for armed forces personnel. The MSP was increased from Rs. 6,000 to Rs. 15,500 per month for officers and from Rs. 2,000 to Rs. 5,200 per month for jawans.
8. One Rank One Pension (OROP): The commission recommended the implementation of the One Rank One Pension (OROP) scheme for armed forces personnel. The OROP scheme ensures that pensioners who retired at the same rank and with the same length of service receive the same pension, regardless of the date of retirement.
9. Pension Revision: The commission recommended the revision of pensions of central government employees and pensioners. The revision was aimed at ensuring that pensioners receive 50% of the pay of the serving employees in the same rank and with the same length of service.
10. Payment of Arrears: The implementation of the recommendations of the 7th Pay Commission resulted in the payment of arrears to central government employees and pensioners. The arrears were paid in two instalments – the first instalment was paid in August 2016 and the second instalment was paid in February 2017.

The implementation of the recommendations of the 7th Pay Commission was met with mixed reactions from various stakeholders. While central government employees welcomed the pay hike, some employees’ associations and trade unions criticized the recommendations for not addressing certain issues such as job security, gender pay gap, and regularization of contractual employees.

The implementation of the recommendations of the 7th Pay Commission also had an impact on the fiscal situation of the government. The pay hike and other benefits resulted in an increase in the salary and pension bill of the central government. This, coupled with the impact of the implementation of the Goods and Services Tax (GST), resulted in an increase in the fiscal deficit of the government.

In conclusion, the 7th Pay Commission was a significant initiative undertaken by the Government of India to revise the salaries and pensions of central government employees. The recommendations of the commission aimed at bringing parity in pay scales across various levels of government employment and improving the productivity of government employees. While the implementation of the recommendations resulted in a pay hike for central government employees, it also had an impact on the fiscal situation of the government.