30Jun

Union Cabinet approves recommendations of 7th Pay Commission

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The Union Cabinet on Wednesday has cleared the 7th Pay Commission report’s recommendations, which will impact close to 10 million babus – 4.7 million Central government employees and 5.2 million pensioners – across the country. While the government has agreed that the recommendations will be effective from Jan 1, 2016 it is yet to clarify whether the arrears would be paid in one instalment or more. Depending on how the arrears are paid, expect a splurge in spending driving up the sale of consumer durables in the period before the festive season. That could drive consumption and investment over the next few months, providing an impetus to the economy. It could also lead to increased production and possibly better profits for some industries.

The 23.55 per cent overall hike in salaries,  allowances and pension cleared by Cabinet today, will entail an additional burden of Rs 1.02 lakh crore or nearly 0.7 per cent of the GDP, to the exchequer. The entry level pay has been recommended to be raised to Rs 18,000 per month from current Rs 7,000 while the maximum pay, drawn by the Cabinet Secretary, has been fixed at Rs 2.5 lakh per month from current Rs 90,000. The secretaries’ panel may have recommended raising minimum entry level pay at Rs 23,500 a month and maximum salary of Rs 3.25 lakh.

Having said that, here below we provide in great detail 7th Pay Commission report Executive Summary submitted by the panel itself to the Centre on the basis of which final decisions were taken. Here is absolutely everything that you need to know without actually reading the report; check it out:

Minimum Pay: After considering all relevant factors and based on the Aykroyd formula the minimum pay in government is recommended to be set at Rs 18000 per month.

New Pay Structure: The present system of pay bands and grade pay has been dispensed with and a new pay matrix has been designed. 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. All existing levels have been subsumed in the new structure; no new levels have been introduced nor has any level been dispensed with.

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