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.
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 :
Ø
Gratuity ceiling enhanced from Rs. 10 to 20 lakh.
The ceiling on gratuity will increase by 25 % whenever DA rises by 50 %.
Ø
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.
Ø
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.
Ø
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.
Ø
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.
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