The background of the constitution of the 7th pay commission goes like this:
In this 21st century, the global economy has undergone a vast change and it has seriously impacted the living conditions of the salaried class. The economic value of the salaries paid to them earlier has diminished. The economy has become more and more consumer economy. Therefore, to keep the salary structure of the employees viable, it has become necessary to improve the pay structure of the employees so that better, more competent and talented people could be attracted for governance.
The highlights of the recommendations made by the 7th pay commission are:
- All recommendations to be implemented from 1 Jan 2016
- 23.55 per cent increase in pay and allowances recommended
- Minimum pay fixed at Rs 18,000 per month; maximum pay at Rs 2.25 lakh
- The rate of annual increment retained at 3 percent
- 24 per cent hike in pensions
- One Rank One Pension proposed for civilian government employees on line of OROP for armed forces
- Ceiling of gratuity enhanced from Rs 10 lakh to Rs 20 lakh; ceiling on gratuity to be raised by 25 per cent whenever DA rises by 50 per cent
- Cabinet Secretary to get Rs 2.5 lakh as against Rs 90,000 per month pay band currently
- Financial impact of implementing recommendations will be Rs 1.02 lakh crore– Rs 73,650 crore to be borne by Central Budget and Rs 28,450 crore by Railway Budget
- Total impact of Commission’s recommendation to raise the ratio of expenditure on salary and wages to GDP by 0.65 percentage points to 0.7 per cent
- MSP (Military Service Pay) more than doubled for service officers to Rs 15,500 per month from Rs 6,000 currently; for nursing officers to Rs 10,800 from Rs 4,200; for JCO/ORs to Rs 5,200 from Rs 2,000 and for non-combatants to Rs 3,600 from Rs 1,000
- Short service commissioned officers will be allowed to exit the armed forces at any point in time between 7 to 10 years of service
- Recommendations will impact 47 lakh serving govt employees, 52 lakh pensioners, including defense personnel.
