7th Pay Commission

7th Pay Commission

• A Pay Commission is set up by the Government of India and it
recommends the changes in the salary structure of central government
employees.
• Millions of government employees are waited for the 7th Pay commission
to be implemented as it will increase their allowances, salary, and other
benefits.
• The Current 7th Pay Commission was to be implemented in January 2016.
However, it had to be delayed.
What is a Pay Commission?
The Pay Commission was established by the Indian government to make recommendations regarding the compensation
of central government employees. Since India gained its independence, seven pay commissions have been established
to examine and suggest changes to the pay structures of all civil and military employees of the Indian government.

Manmohan Singh, the then-Prime Minister, approved the 7th Pay Commission, and it will be put into effect by January
2016, according to P. Chidambaram, the former finance minister.

The Seventh Pay Commission was not implemented by the suggested date of implementation, nonetheless, because of
several challenges.

In the month of July, 2016, AK Mathur headed the Seventh Pay Commission and submitted a report on it to Finance
Minister Arun Jaitley.

The report suggested a 23.55% hike in pay and allowances of government employees. If the 7th pay commission is
implemented, government employees will benefit from a pay hike and other benefits. The Government of India is
planning to implement the 7th Pay Commission's recommendations by January 2017.

Uttar Pradesh has already approved the 7th Pay Commission and have announced that it will be implemented by
January 2017.
Seventh Central Pay Commission of India
• Employees and staffers of the Central Government in India receive their pay
according to the 7th Pay Commission System.
• After the Union Budget presented on 5 July 2019, central government
employees are waiting for an update from the 7th Pay Commission that is
generally made every 6 months.
• This news is related to an increase in their Dearness Allowance (DA). In
January 2019, the government had raised the DA for government employees
by 3%.
• Financial experts are now expecting an increase of 5% in the DA.
 Key Highlights of 7th Pay Commission
• Recommended minimum pay for government employees:
A newly hired government employee at entry level would now make a minimum salary of Rs.18,000 per month as
opposed to Rs.7,000.
The minimum pay for a newly hired Class I Officer has been raised to Rs.56,100 per month
• Recommended maximum pay for government employees:
The Seventh Pay Commission also recommends to increase the maximum pay for government employees to Rs.2.25
lakhs per month for Apex Scale and
Rs.2.5 lakhs per month for Cabinet Secretary and others working at the same level
Pay Matrix: Considering the issues that exist in the Grade Pay Structure, the 7th Pay Commission has recommended
a new pay matrix. Once the 7th Pay Commission is implemented, the status of a government employee will not be
decided by Grade Pay but by the level in the new Pay Matrix.
New Pay Structure: Ever since Central Government employees heard about the Pay Matrix system, they have
questions about their grades and levels. The New Pay Structure recommended by the 7th Pay Commission have
included all existing levels and have not introduced any new levels.
 Key Highlights of 7th Pay Commission
Work Related Illness and Injury Leave (WRIIL):
The Pay Commission recommends full pay and allowances to be granted to all employees who are hospitalised due to
WRIIL.
Fitment:
The 7th Pay Commission recommends a uniform Fitment Factor to eliminate partiality and discrimination in the
system. The Pay Commission has recommended a uniform Fitment Factor of 2.57 for all employees.
The fitment factor pertaining to the 7th Central Pay Commission is likely to be set at 3.00 times from an earlier 2.57
times.
However, in contrast with the recommendations made by the 7th CPC, the employees are currently demanding a hike
of 3.68 which essentially increases the fitment factor by three times.
Dearness Allowance (DA):
In what came as a huge relief to government employees, the Dearness Allowance witnessed a hike of 2% recently.
This move/act by the Union Cabinet is said to benefit more than 50 lakh Central Government employees and around
55 lakh pensioners and staffers.
This hike was mostly focused on Central Government employees as they are most likely to bear the brunt of factors
such as inflation. The raise went straight off to 7% from an earlier 5%.
 Key Highlights of 7th Pay Commission
• Annual increment: The Pay Commission has suggested to retain the annual increment of 3% p.a.
• Modified Assured Career Progression (MACP):
The 7th Pay Commission aims at improving the quality of services offered by the Government of India and
thereby focuses on individual performance. According to the report, performance benchmarks of MACP has
been altered and made stricter. They have made the performance indicator stricter by adding “Very good”
performance level which was “Good” before.
The report goes on to recommend that no annual increments should be given to employees who do not meet
their performance level and no promotions will be given if MACP is low for the first 20 years in service.
• Military Service pay (MSP): The Seventh Pay Commission recommends MSP to be paid for Defence
Personnel only. MSP is the compensation paid to people offering military service in India. MSP will be
payable for all ranks inclusive of Brigadiers and people at the same level.
Allowances:
The Cabinet has examined a total of 196 allowances which are currently present and
have abolished 51 allowances,
retaining 37 allowances.
 Key Highlights of 7th Pay Commission
• House Rent Allowance (HRA): As the 7th Pay Commission aims at increasing the basic pay of
government employees, the Pay Commission has recommended that the House Rent Allowance also
increase by 24%.
The Commission also states that HRA will increase to 27%, 18%, and 9% when DA (dearness allowance)
crosses 50%.
HRS will further increase and will be paid at 30%, 20%, and 10% when DA crosses 100%.
• Advances:
Apart from Personal Computer Advance and House Building Advance, 7th Pay Commission has abolished
all non-interest bearing advances. It is also noteworthy that House Building Advance has been increased
from Rs.7.5 lakhs to Rs.25 lakhs.
Key Highlights of 7th Pay Commission
 Key Highlights of 7th Pay Commission
Medical changes
The 7th Pay Commission has recommended a Health Insurance Scheme for Central Government
employees and pensioners. The report also recommends cashless medical benefit for pensioners outside
CGHS area.

Pension
The Commission recommends changing the current pension system. They propose a new pension
formula for civil employees, such as CAPF and military personnel who retired prior to January 1, 2016.
The new formula will put an emphasis on achieving balance between current retirees and pensioners.
The past pensioners will be placed on the new Pay Matrix system to determine the new pension.
The total number of increments a pensioner earned at that level while in active service will later be
added, at a rate of 3% annually, to determine the pension amount.
The new pension will be equal to 50% of the amount as determined. A pensioner will receive 2.57 times
their base pension in the future.
 Key Highlights of 7th Pay Commission
• Gratuity:
The Commission recommends the ceiling of gratuity to be increased from the current Rs.10 lakh to Rs.20
lakh.
They further recommend that the ceiling on gratuity may be raised by 25% when the DA rises by 50%.

• Disability Pension for Armed Forces:

Instead of the current percentile-based disability pension regime, The Commission has recommended to
implement a slab-based system for disability element.
Key Highlights of 7th Pay Commission