In what has come as good news for central government employees, the finance ministry has provisioned Rs 70,000 crore, with regards to the 7th Pay Commission.
This comes in the wake of the recommendations by a committee led by retired Justice A K Mathur, who has suggested that at least Rs 70,000 crore has to be provisioned in order to grant a compensation hike of 30 per cent for more than 47 lakh central government employees.
According to sources, this hike will result in the minimum monthly salary being raised from Rs 18,000 to Rs 23,500. The highest basic salary will be hiked from Rs 2,50,000 to Rs 3,25,000.
This is expected to be effective from 1 August, 2016. For the uninitiated, here are the highlights of the 7th Pay Commission:
The new regulations will ensure that there is no grade pay system. This will be replaced by the pay scale. One of the features of the new development is that the arrears will be given in one installment.
The retirement age too is now at 60 years or 33 years of service, whichever is first applicable. It may be noted that last week, the Prime Minister’s Office (PMO) had ordered Cabinet Secretaries P K Sinha, to examine the report submitted by the commission and suggest the hike of salary of central government employees.
While this is certainly positive news for the salaried class, it was feared that it is the government, and the finance ministry in particular that will facing the burden of the hike.
It was expected that the ministry would not be able to stick to the fiscal deficit target of 3.9 percent for 2016-17. However, union finance minister Arun Jaitley has assured one-and-all that the target would not be exceeded.
In addition to the salary hike, the panel has also recommended to increase House Rent Allowance (HRA) to 27 percent, 18 percent and nine percent if the Dearness Allowance (DA) crosses 50 percent; and increment of 30 percent, 20 percent and 10 percent, when DA crosses 100 percent.
However, all is not smooth sail in the recommendations, which has stressed on the importance of performance-based pay. Sources say, that the committee has suggested that central government employees should not be allowed to earn annual increments if they fail to meet performance criterion.
This is a step in the right direction, feel many, as it will force employees to perform better. A report by the panel said, “The Commission is proposing withholding of annual increments in the case of those employees who are not able to meet the benchmark either for MACP or a regular promotion within the first 20 years of their service. This will act as a deterrent for complacent and inefficient employees. However, since this is not a penalty, the norms for penal action in disciplinary cases involving withholding increments will not be applicable in such cases. This will be treated as an efficiency bar”.
Keeping the salient features of the 7th Pay Commission aside, it is important to know the characteristics of the earlier pay commissions, and how these have progressed over the years.
The first Pay Commission came in the year 1946, with the basic salary being fixed at Rs 35. The second Pay Commission came about in the year 1959, when the basic salary was of Rs 80.
After a decade, in 1973, the third Pay Commission came into effect which decided the then basic salary to be Rs 185.
This had increased to Rs 750 in the year 1986 in the fourth Pay Commission. This was followed by the fifth Pay Commission, which increased the same to Rs 2550.
Later, the sixth Pay Commission fixed the basic salary at Rs 6660 in the year 2006.
