7th Pay Commission: 23.5% hike in salaries, minimum pay increased to Rs 18,000 per month; arrears to be paid this year

Starting salary of a newly recruited employee at lowest level will now be Rs 18,000 per month whereas for a freshly recruited Class I officer, it will be Rs 56, 100 per month.

7th Pay Commission: 23.5% hike in salaries, minimum pay increased to Rs 18,000 per month; arrears to be paid this year

New Delhi: The Cabinet, headed by Prime Minister Narendra Modi, Wednesday cleared the recommendations of the 7th Pay Commission according to which the overall hike in salary and allowance of central government employees and pensioners comes to 23.5 percent.

"The recommendations of the Pay Commission with respect to pay and pension, have been accepted by and large by the government. And those recommendations will be implemented with effect from January 1, 2016, and the arrears would also be paid in this year," Finance Minister Arun Jaitley told reporters here after the Cabinet had approved the recommendations.

The decision on pay panel suggestions relating to allowances has been referred to a Committee headed by Finance Secretary.


The Finance Minister said the government is "not surprised" at the additional expenditure, which is estimated at Rs 102,100 crore as per official estimates.

The Cabinet has also decided that arrears of pay and pensionary benefits will be paid during the current financial year (2016-17) itself, unlike in the past when parts of arrears were paid in the next financial year.


The new scales of pay provide for entry-level basic pay going up from Rs 7,000 per month to Rs 18,000, while at the highest level i.e. Secretary, it would go up from Rs 90,000 to Rs 2.5 lakh. For Class 1 officers, the starting salary will be Rs 56,100.

The recommendations will benefit over 1 crore employees. This includes over 47 lakh central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the defence forces.

Here are the Key Highlights

-Gratuity ceiling doubled to Rs 20 lakh

-Housing loan allowance hiked from Rs 7.5 lakh to Rs 25 lakh

-Minimum pension increased from Rs 3,500 to Rs 9,000

-Rate of annual increment stays - 3%


-Ex-gratia lump sum compensation and military service pay increased

-7th Pay Commission recommendations to be implemented within 6 months from due date

-Existing rates of monthly contribution towards Group Insurance to continue

-7th Pay Commission starting pay in each Level of Pay Matrix calculated by applying Index of Rationalisation


-Total annual burden of pay, pensions and arrears of 7th Pay Commission recommendations: Rs 1,02,100 crore

-7th Pay Commission recommendations on allowances to be referred to a Committee headed by Secy

-Based on minimum pay, fitment factor of 2.57 approved for revising pay of all employees uniformly across all level

-Minimum pay fixed at Rs 18,000 per month; maximum pay at Rs 2.25 lakh


-The Cabinet approval will benefit nearly 50 lakh central government employees and 58 lakh pensioners

-Arrears will be paid this year

-Pay hike to be implemented from January 1, 2016

-Govt by and large accepts recommendations of 7th Pay Panel

-Finance Minister Arun Jaitley starts Cabinet briefing on 7th Pay Commission

- Cabinet briefing by Union Ministers Arun Jaitley and Narendra Singh Tomar at 5.30 PM


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