7th Pay Commission Current Affairs

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Union Government issues notification for implementation of 7th Pay Commission

The Union Government has issued notification for the implementation of 7th Pay Commission. It was issued as per the Cabinet approval in June 2016.

With this issuance, 4.8 million central government employees and 5.2 million pensioners will get the increased payout from their August 2016 salaries.

Besides, Union Government has given CBSE chief Rajesh Kumar Chaturvedi an additional charge of Chief of the implementation cell of the Seventh Central Pay Commission.

Key Facts

  • The 7th Pay Commission hike will result in increase in salaries of central government employees in the range of 7 thousand rupees to 18 thousand rupees per month.
  • A fitment factor of 2.57 will also apply for pay revision of all employees and the rate of annual increment has been retained at 3%.
  • There will be two dates for grant of increment i.e. on January 1 and July 1 every year – instead of the existing July 1 only.
  • Employees will be entitled to only one annual increment on either of these two dates depending on the date of appointment, promotion or grant of financial upgradation.
  • It is estimated that the total burden on the exchequer on account of the 7th Pay Commission recommendation will be 1.02 lakh crore rupees in 2016-17.
  • There will be an additional impact of 12,133 crore rupees on arrears and of salary and pension for two months.

Background

The 7th Pay Commission headed by Justice AK Mathur had recommended 14.27 per cent hike in basic pay at junior levels in November 2015. The Commission had recommended changes in the pay of around 1 crore individuals which includes 33 lakh central government employees, 14 lakh armed forces personnel, and 52 lakh pensioners.

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7th Central Pay Commission submits report, proposes 23.55% salary hike

7th Central Pay Commission (CPC) headed by Justice AK Mathur has recommended 23.55 percent hike in pay and allowances of government employees.

In this regard the commission has submitted its report to Union Finance Ministry in New Delhi and the recommended pay revision will come into effect from 1 January 2016.

Recommendations of 7th CPC

  • Minimum basic pay of 18 thousand and maximum of 2.5 lakh rupees per month.
  • Abolition of grade pay and pay band structure. The rate of annual increment for employees will be three percent.
  • The pay will go up by 16 percent, allowances by 63 percent and pension by 24 percent.
  • Abolition of 52 allowances and introduction of a Health Insurance Scheme.
  • One Rank One Pension (OROP) scheme for central government staffers, para military as well as armed forces personnel.
  • Increase in military service pay and revised pension formula for civil employees including Central Armed Police Forces (CAPF) and Defense Personnel retiring before 1 January 2016.

Implications

  • The pay revision will impact 47 lakh serving employee and 52 lakh pensioners of the Central Government including in the Defence and Railways.
  • It will cost public exchequer over 1 lakh crore rupees annually.
  • The implementation of Pay Commission will impact fiscal deficit by 0.65 percent.

Finance Ministry is setting up committee headed by Expenditure Secretary to go through the report for its implementation.

Background

The 7th Central Pay Commission was set up in February 2014 to revise remuneration of employees and pensioners of central government including Defence and Railways. Its recommendations will also have a bearing on the salaries of the state government staff.

The CPC is constituted by the Union Government after almost every 10 years in order to revise the pay scales of employees. The 6th CPC under the Chairmanship of B.N.Srikrishna was approved in July 2006.

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