New Delhi: The government had in January 2016 had set up the high-powered panel to process the recommendations of the 7th Pay Commission which will have bearing on the remuneration of nearly 50 lakh central government employees and 58 lakh pensioners.


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The Union Cabinet on June 29 cleared the recommendations of the 7th Pay Commission headed by AK Mathur in respect of the hike in basic pay and pension. However, the decision on 7th Pay Commission suggestions relating to allowances had been referred to a Committee headed by the Finance Secretary.


The Committee will complete its work in a time bound manner and submit its reports within a period of 4 months. Till a final decision, all existing allowances will continue to be paid at the existing rates.


The 7th Pay Commission examined a total of 196 existing allowances and, by way of rationalization, recommended abolition of 51 allowances and subsuming of 37 allowances. Given the significant changes in the existing provisions for allowances which may have wide ranging implications, the Cabinet decided to constitute a Committee headed by Finance Secretary for further examination of the recommendations of 7th CPC on allowances.


On 29 June 2016, Government accepted the recommendation of 7th Pay Commission Report with meager increase in salary of 14 percent after six month of intense evaluation and successive discussions. The Finance Minister of India claimed it historical increase of salaries due to little knowledge of Sixth Pay Commission.


The new scales of pay provide for entry-level basic are now 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
  • 7th Pay Commission recommendations to be implemented within 6 months from due date
  • Existing rates of monthly contribution towards Group Insurance to continue
  • 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 Secretary
  • 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
  • Pay hike to be implemented from January 1, 2016
  • Budgetary allocation

While the Budget for 2016-17 fiscal did not provide an explicit provision for implementation of the 7th Pay Commission, the government had said the once-in-a-decade pay hike for government employees has been built in as interim allocation for different ministries. Around Rs 70,000 crore has been provisioned for it.