7th Pay Commission: No decision yet on increase in allowances; pay hike to be implemented from Jan 2016

Zee Media Bureau

New Delhi: The Union Cabinet in its meeting on Wednesday accepted the recommendations of Justice A K Mathur headed 7th Pay Commission in respect of the hike in basic pay and pension but the decision on its suggestions relating to allowances has been referred to a Committee headed by Finance Secretary.

The 7th Pay Commission had recommended abolition of 53 out of 196 allowances that the government employees currently get and moderation in several others.

The scrapping of the allowances was opposed by the Unions and so it has been referred to a Committee of Secretaries.

Announcing the government's decision, Finance Minister Arun Jaitley said government salaries have to be respectable in comparison to private sector, for which the Commission had engaged IIM-Ahmedabad for making a comparison.

"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," he said.

The recommendations cover 47 lakh central government employees and 53 lakh pensioners. This include 14 lakh serving employees and 18 lakh pensioners in defence forces.

Jaitley said that the government intends to pay arrears for six months within the course of this 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.

Rates of Military Service Pay have been revised from Rs 1,000, 2,000, 4,200 and 6,000 to 3,600, 5,200, 10,800 and 15,500 respectively for various categories of Defence Forces personnel.

While the Cabinet approved the Commission's recommendation of enhancing ceiling of house building loan from Rs 7.5 lakh to Rs 25 lakh, the suggestion of deducting Rs 1,500-5,000 per month towards group insurance was not accepted.

Rate of annual increment has been retained at 3 percent.

Also interest free advances for medical treatment, travel allowance and LTC have been retained. "All other interest free advances have been abolished," an official statement said.

For armed forces, gratuity ceiling has been doubled to Rs 20 lakh and it would increase by 25 percent whenever Dearness Allowance rises by 50 percent.