Who Does the 7th Pay Commission Benefit? All You Need to Know

Here’s everything you need to know about the 7th Pay Commission and its recommendations.

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(Photo: iStock)

The Central government’s decision to extend the 7th Central Pay Commission’s benefits to teachers and other academic staff of the state government and government-aided degree-level technical institutions stands to benefit a total of 29,264 staff, according to Human Resource Development (HRD) Minister Prakash Javadekar.

While the academic staff in question are celebrating the news, the move is expected to cost an additional Rs 1,241.78 crore in liability to the central government. On top of this, the central government will also bear the burden of reimbursing 50 percent of the overall additional expenditure, from 1 January 2016 to 31 March 2019, which will be incurred by these institutions for payment of arrears on account of the 7th Central Pay Commission.

Before this, in 2016, the Union Cabinet had approved the 7th Pay Commission’s recommendations to hike salaries of central government employees across sectors, as well as pensions.

Here’s all you need to know.

What Are the Recommendations in the 7th Pay Commission Report?

The Union Cabinet had approved the implementation of Seventh Pay Commission recommendations on 29 June 2016, PRS reported.

What Is a Pay Commission?

A Pay Commission is set up by the Government of India, which is tasked with reviewing and making recommendations on the work and pay structure of all civil and military divisions of the government, and giving recommendations regarding changes in the salary structure of its employees accordingly. The Commission is also given 18 months from the date of its constitution to make its recommendations.

Since India gained independence in 1947, seven such Pay Commissions have been set up. The first Pay Commission, under the Chairmanship of Srinivasa Varadachariar, was established on January 1946.

The recommendations of the 7th Pay Commission were initially expected to be implemented on 1 January, 2016.(Photo Courtesy: Wordpress)

The recommendations of the seventh Pay Commission were initially expected to be implemented on 1 January 2016.

The recommendations it had made, as PRS states, were:

• Increase the minimum monthly salary of a government employee to Rs 18,000 per month from the previous Rs 7,000 (as per the Sixth Pay Commission).
• Increase the maximum monthly salary of a government employee to Rs 2,50,000 per month from the previous Rs 90,000.
• Moving away from existing system of pay bands and grade pay to determine an employee’s salary.
• Instead, to adopt a new pay matrix based on the hierarchy of employees and the pay progression during the period of their employment.
• Periodic review of this pay matrix, in a frequency of less than 10 years.

The Commission also introduced the concept of performance-related pay, based on the annual appraisal of the employee.

Along with this, it also suggested that annual increments of an employee should be withheld if he or she is unable to meet what is the expected standards of performance for a regular promotion or career progression, the report added.

What is the Hike That's Being Awarded & Who Will it Benefit?

Back when it was being formulated, the 7th Pay Commission report had suggested a 23.55 percent hike in the pay and allowances of employees across all sectors.

This overall hike would lead to an additional burden of Rs 1.02 lakh crore or nearly 0.7 percent of the GDP, to the central exchequer, Financial Express reported. While the minimum pay per month was recommended to be raised to Rs 18,000 from the previous Rs 7,000, the maximum pay per month was lifted to Rs 2.5 lakh per month from the previous Rs 90,000. Along with this, the report suggested that the rate of annual increment be retained at 3 percent.

Now in addition to this, the central government on Tuesday, 15 January, announced that the recommendations of the 7th Pay Commission’s report will now be extended to teachers and other academic staff of the State government and government-aided degree-level technical institutions. This will stand to benefit a total of 29,264 teachers and other academic staff of State Government funded institutes, IANS reported.

Back when it was being formulated, the 7th Pay Commission report had suggested a 23.55 percent hike in the pay and allowances of employees across all sectors.(Photo: iStock)

Other than this, about 3.5 lakh teachers and other academic staff of private colleges or other institutions within the purview of All India Council for Technical Education (AICTE) will also benefit from the approval, IANS reported.

To sum up simply, the central government - as hike- would now spend  the earlier Rs 1,02,100 crore in addition to the another Rs 1,241 crore, after it extended the Commission’s recommendations to include the teachers and other academic staff of the State government and government-aided degree-level technical institutions.

This announcement, made by HRD Minister Prakash Javadekar was followed by another, where he also said that 50 percent of the total additional expenditure to be incurred by these institutions (mentioned above) for the payment of arrears on account of 7th Central Pay Commission implementation, will be reimbursed by the central government, Livemint reported.

Which simply put, means that the government would pay 50 percent of the arrears it owed to the staff of these institutes.

What Are the Pay Matrices For Defence & Military Nursing Service?

A more compact Defence Pay Matrix was drawn up by the 7th Pay Commission for people working in that sector, similar to the pay matrix drawn up for civilian employees, Financial Express reported.

The launch of the Defence Pay Matrix for combatants corresponded to the existing GP 2000- the induction level for Sepoys and defence personnel of equal rank. According to Hindustan Times, in an attempt to improve the defence pay matrix, the Cabinet decided to “enhance Index of Rationalisation for Level 13A (Brigadier) and providing for additional stages in Level 12A (Lieutenant Colonel), 13 (Colonel) and 13A (Brigadier) in order to bring parity with Combined Armed Police Forces (CAPF) counterparts at the maximum of the respective Levels.”

Additionally, the rate of military service pay was revised by the Cabinet from Rs 1,000, Rs 2,000, Rs 4,200 and Rs 6,000 to Rs 3,600, Rs 5,200, Rs 10,800 and Rs 15,500 respectively- as per the recommendations of the Commission- for the various defence personnel, the Hindustan Times report added.

The pay matrix for the Military Nursing Officers (MNS) is built in a similar structure- keeping in mind factors such as the number of levels, differenct ages and retirement profile of the officials.

What is the Report's Impact on Govt Spending?

As per the initial recommendations of the 7th Pay Commission, the government was slated to incur an expense of Rs 1,02,100 crore, PRS reports.

Of this original amount, 72 percent is expected to be borne by the central government, while 28 percent of the expenditure is the responsibility of the railways, the report added. If one went by this, then the overall expenditure would increase by 23.6 percent, with a 16 percent increase in expenses on pay, 63 percent in allowances and 24 percent in pension, the PRS report added.

However, now with the extension of the Commission’s benefits to the teachers and other academic staff of the State government and government-aided degree-level technical institutions, which is expected to cost the government another Rs 1,241 crore, the division of payments by the various government bodies and the overall expenditure, will now change.