7th Pay Panel Report At a Glance – Business Standard
Two out of the last three times, the BSE Sensex fell on the day following submission of the 7th Central Pay Commission report, data compiled by BS Research Bureau showed. The BSE Sensitive Index came into use on January 1, 1986, the same day as the 4th Pay Commission recommendations took effect. The Sensex has since seen three pay panels. The government has cleared the terms of reference for the seventh pay commission for central government employees, but the states, which usually follow central norms in fixing pay scales for their employees, want to be adequately compensated for the hit they would have to take on their exchequer. GENERAL RECOMMENDATIONS Recommended
date of implementation is January 1, 2016
Minimum
monthly pay set at Rs 18,000
Maximum
monthly pay Rs 2.25 lakh (apex scale), Rs 2.50 lakh (Cabinet secretary and
equivalent) Pay
bands, grade pay abolished, new pay matrix designed
Rate
of annual increment retained at 3%
Performance-related
pay recommended for all categories
FINANCIAL IMPLICATIONS Total
financial impact for FY2016-17: Rs 1.02 lakh crore
Impact
on FY17 Union Budget: Rs 73,650 crore;Impact on Rail Budget: Rs 28,450 crore
Overall
increase in pay, allowances, pensions: 23.55 per cent
Increase
in pay: 16%; Increase in allowances: 63%, Increase in pension: 24%
Expenditure-GDP
ratio to be impacted by 0.65% points vs 0.77% for 6th Pay Commission DEFENCE
Military
service pay increased across board
Short-service
commission (SSC) officers exit at 7-10 years, with terminal gratuity equivalent of 10.5 months SSC
officers entitled to a fully-funded one year Executive Programme/M.Tech
Revised Parity
formulation for lateral entry/resettlement of defence forces personnel
recommended between field and headquarters staff for similar functions
Systemic
change in cadre review for Group A officers recommended ALLOWANCES
Recommends Another
abolishing 52 allowances altogether
36 allowances abolished as separate identities, but subsumed in existing allowances
Allowances
relating to risk and hardship to be governed by the proposed Risk and Hardship
Matrix HRA
recommended to be paid at the rate of 24%, 16%, 8% of new basic pay for class X, Y and Z cities, respectively HRA
to be revised to 27%, 18%, 9% respectively, when DA crosses 50%, and further revised to 30%, 20%, 10% when DA crosses 100% Emphasis
placed on simplifying the process of claiming allowances
INSURANCE SCHEMES AND MEDICAL FACILITIES Substantial
increase for central government employees group insurance schemes' monthly deduction and insurance amount Introduction
of a Health Insurance Scheme for employees and pensioners recommended PENSION, COMPENSATION AND GRATUITY
Revised
OROP-type pension formulation for civil, defence and paramilitary employees
Enhancement
in the ceiling of gratuity from Rs 10 lakh to Rs 20 lakh
Recommends
reverting to a slab-based system for disability element
Revision
of rates of lump sum compensation for next of kin to be applied uniformly to defence, civil, paramilitary personnel Paramilitary Strong
personnel to be accorded martyr status in case of death in line of duty
pension grievance redressal mechanism recommended
The notes are also a first for the Pay Commissions, set up every 10 years by the central government to revise the pay and allowances of central government employees. In the fifth Pay Commission, economist Suresh Tendulkar had put in a dissent note but it was on a macro theme suggesting a pruning of the bureaucracy and relating wages to performance.