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 :
·
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.
