7th Pay Commission

The Pay Commission is a government of India administrative system/mechanism established in 1956 to determine the salaries of government employees. Since the establishment of the First Pay Commission in 1956, every decade has seen the birth of a commission that determines the wages of government employees for a specific time period.

The Second Pay Commission was established in August 1957 and completed its work in two years. The Third Pay Commission, which was established in April 1970, issued its report in March 1973. The Fourth Pay Commission's recommendations covered the years 1986 to 1996. The Fifth Pay Commission was in charge from 1996 to 2008. The cabinet approved the setting of the 6th Pay Commission in July 2006. 

Let us understand the pay commission, the latest i.e 7^th pay commission in detail and also have a look at a few gk questions and answers on the 7^th pay commission.

7^th Pay Commission in India

On February 28, 2014, the Manmohan Singh-led UPA government established the Seventh Pay Commission, which was chaired by Justice Ashok Kumar Mathur. Shri Vivek Rane (IAS), Dr Rathin Roy (economist, Director NIPFP), and Smt Meena Agarwal (administrative expert) serve as members of the 7^th Pay Commission. The 7th Pay Commission delivered its report on November 19, 2015, and the recommendations were to take effect on January 1, 2016. 

The approaches that were followed by the panel of the 7th pay commission are as follows:

• According to the panel, a holistic approach was used in finalising the levels of salaries, allowances, and other perquisites of the compensation structure. In addition to other research, the Panel commissioned three studies by expert bodies to this end:

1. An IIM Ahmedabad study to determine the nature and amount of total compensation for select job profiles in the government sector versus similarly placed profiles in CPSUs and the private sector.

2. Study by the Institute of Defence Studies and Analyses on the nature, quantum, and components of defence expenditure and defence pension; 

3. Study by IIM Kolkata on the fiscal implications of the V and VI CPC implementation on the Union and State Governments' finances.

• According to the panel report, the new pay structure has been broadly laid out as an open-ended, layered matrix for both civilians and armed forces personnel. It has been kept in mind that a person should not stagnate but should be given a fair chance to advance through merit and secure better emoluments so that frustration does not set in.

• The goal was to match merit with adequate compensation. While pay increases may not be able to keep up with market forces, it was ensured that they are not so unappealing that the best talent is not drawn to government services.

Details of First Six Pay Commissions of India

What are the Highlights of the 7^th Pay Commission in India?

• Minimum Pay: Minimum wage has been increased from Rs 7,000 to Rs 18,000 per month at the entry-level. The minimum monthly wage for a newly hired Class I Officer is now Rs 56,100.

• Maximum Salary: The maximum pay at the secretariat/equivalent level has been enhanced to Rs 2,25,000 per month for Apex Scale and Rs 2,50,000 per month for Cabinet Secretary and those who are currently on the same pay scale.

• Annual Increment: The annual increment rate will remain at 3%.

• New Structure: The current system of pay bands and grade pay has been phased out in favour of a new pay matrix. The pay matrix now includes Grade Pay as well. The employee's standing, which was previously decided by grade pay, will now be determined by the pay matrix level.

• Fitting Factor: It is proposed that a fitment factor of 2.57 be applied universally to all personnel.

• Military Service Pay (MSP): Previously, Military Service Pay (MSP) was payable to all grades up to and including Brigadiers and their equivalents. Now, only Defence Forces personnel will be eligible for MSP. MSP is a form of remuneration for military service, and it is recommended that MSP be increased in certain areas.

• Modified Assured Career Progression (MACP): MACP stands for Modified Assured Career Progression. Employees who do not reach the benchmark for MACP or for a routine promotion in the first 20 years of their service are not eligible for an annual increase.

• Short-Service Commissioned Officers receive an additional benefit.

• Cadre Review: For Group A officers, a systemic modification in the Cadre Review procedure is recommended.

• Allowance: The Commission has proposed that 52 allowances be eliminated entirely. Another 36 allowances have been eliminated as distinct entities, but have been absorbed into existing or newly proposed allowances. Due to an increase in basic salary, it was recommended that the House Rent Allowance (HRA) be increased, with an additional increase based on changes in DA.

• Advance: Non-interest bearing advances and other interest-bearing advances, with the exception of personal computer advances and House Building Advances (HBA), are eliminated, and the HBA maximum is raised from Rs 7.5 lakhs to Rs 25 lakhs.

• Central Government Employee Group Insurance Scheme (CGEGIS): Rates of contribution and coverage under the Central Government Employee Group Insurance Scheme (CGEGIS).

• Medical Facility: Introduction of a Health Insurance Scheme for Central Government employees and retirees, including the inclusion of postal pensioners in the CGHS and the merger of postal dispensaries with the CGHS.

• Pension: Revised pension formula for civil employees, including Central Armed Police Forces (CAPF) personnel and defence personnel who retired prior to January 1, 2016.

• Gratuity: The gratuity ceiling has been raised from Rs 10 lakhs to Rs 20 lakhs. When DA increases by 50%, the gratuity ceiling may be raised by 25%.

• NPS (New Pension System): Following the receipt of numerous NPS-related grievances, the Commission recommended a number of steps to improve the functioning of the NPS, as well as the establishment of a strong grievance redressal mechanism.

• Performance-Based Pay: The introduction of Performance Related Pay (PRP), which will replace the existing bonus scheme for all categories of Central Government employees, was recommended, based on quality Results Framework Documents, reformed Annual Performance Appraisal Reports, and some other broad Guidelines.

• Disability Pension for the Armed Forces: A slab-based disability pension regime is preferred over the current percentile-based disability pension regime.

A Few GK Questions and Answers on 7^th Pay Commission

1.Who presided over the 7^th Pay Commission's proceedings?

Answer: Justice A.K. Singh Mathur was appointed as chairman of the 7^th Pay Commission by the former PM Manmohan Singh government on September 25, 2013.

2.In what year was India's first pay commission created?

Answer: In January 1946, India's first Pay Commission was established. Since then, seven pay commissions have been established.

3.When were the recommendations of the Seventh Pay Commission implemented?

Answer: Since January 1, 2016, the 7^th Pay Commission's recommendations have been implemented.

4.The composition of the Pay Commission comes under which ministry?

Answer: The Pay Commission is set up by the Ministry of Finance's Department of Expenditure.

5.What was the maximum pay recommended by the 7th Pay Commission?

Answer: According to the 7^th Pay Commission, the maximum monthly salary for Cabinet Secretaries and others currently at the same pay level was Rs 2.5 lac. The apex scale salary was Rs 2,25,000 (Fixed). This apex scale would be awarded to Chief Secretaries of States and Union Secretaries in charge of various ministries in the Government of India.