Cabinet approves 7th Pay commission recommendation of 23.5 per cent hike

This implies an increase 16 percent in basic, 63 percent increase in allowances, and a 24 per cent increase in pension. 

More than 1 crore central government employees, which includes 40 lakh working employees and 60 lakh retired central government employees, will be benefited as the cabinet approves 23.5 per cent hike in pay package as recommended by the 7th Pay commission.

This implies an increase 16 percent in salary, 63 percent increase in allowances, and a 24 per cent increase in pension.

As per the revised package, the lowest salary for central government employees will be raised from Rs 7,000 to Rs, 18,000, whoch much higher than that in the private sector.

For a fresh Class I officer recruit, the starting salary will be Rs 56,100 and a cabinet secretary, the highest level for a central government employee, the salary will be Rs 2,50,000.

The raise in salary will be effective from Jan 1, 2016 and Finance Minister, Arun Jaitely has also announced that the arrears will be paid by end of this year.

The 7th Pay commission has abolished 52 allowances and merged 36 others. Similarly all interest free advances have been abolished except for Personal Computer Advance (PCA) and House Building Advance (HBA).

The Pay commission had recommended these changes in November 2015 and it has been approved by the government in just 8 months. During the 5th and 6th Pay commission, government employee had to wait for 19 months and 32 months respectively for the implementation of the Commission’s recommendations.

For the financial year 2016-17, the financial burden on the government due to this raise, will be Rs 1 Lakh crore plus. Of this, Rs 39,100 crore will go towards pay, Rs 29,300 crore will be spent on Allowances and increase in pension will cost Rs 33,700 crore.

Though the market has responded positively to this raise, a section of central government employees is still not happy with the same. Confederation of Central Government Employees & Workers has called for a strike on July 11 to protest against the 16 per cent increase in basic salary.

Besides, a fitment factor of 2.57 is being proposed to be applied uniformly for all employees and the rate of annual increment is being retained at 3 percent.

The 7th Pay commission has abolished 52 allowances and merged 36 others. Similarly all interest free advances have been abolished except for Personal Computer Advance (PCA) and House Building Advance (HBA). In addition, the HBA ceiling has been increased to Rs 25 lakh from the present Rs 7.5 lakh.

Though the market has responded positively to this raise, a section of central government employees is still not happy with the same. Confederation of Central Government Employees & Workers has called for a strike on July 11 to protest against the 16 per cent increase in basic salary. They demand a 18-20 per cent increase in basic pay. A group of central government have already started their agitation in Chennai.