Seventh Pay Commission: Will 2018 end the long wait of 50 lakh employees for revised salary?

The government approved the recommendations of the 7th Pay Commission or 7th CPC in 2016. However, the unresolved issue over hike in minimum pay for around 50 lakh employees remained in question. 

However, analysts deny the scope for a change in minimum basic pay from Rs 18,000 to Rs 26,000.

The Seventh Pay Commission had earlier recommended Rs 18,000 as the basic salary but the employees are demanding it to raise further to Rs 26,000. 

India.com cited a source saying that the Department of Personnel Training letter had said that fitment factor and minimum pay didn’t come under the National Anomaly Committee. The source close to the development also added that it was futile to hope that there would be any change in the future.

It was reported earlier that the National Anomaly Committee might agree to making the minimum salary to be Rs 21,000 from Rs 18,000. The fitment factor was reportedly to be increased from 2.57 to 3 times.

Fitment factor is a figure used by 7th CPC with which the basic pay in 6th CPC regime (i.e Pay in Pay band + Grade pay) is multiplied in order to fix basic pay in revised pay structure (i.e 7th CPC). Fitment factor formulated by 7th CPC is 2.57.

But as the wait for hiked salaries seems to be never-ending, the delay has irked many employees. Many employee unions have threatened the government to launch an indefinite nationwide protest. 

However, Rajasthan government at the starting of this month had announced that it would provide benefits under seventh pay panel recommendations to its nearly 12.5 lakh employees and pensioners with effect from January 1 this year.

But, the central government employees might have to wait for a longer period as their demand of Rs 26,000 as basic minimum pay is ulikely to meet. As the government is reportedly worried over rising inflation and if the salaries of government employees are increased then there are chances that the inflation may rise further.

The government spends  a whopping Rs 10.18 trillion on the emoluments of government employees, both at the centre and in states, a staggering 8.15% of the country's GDP.

Taken against the backdrop of spending on education, health and defence, the figures show a large chunk of government budget goes into the salaries, pensions and allowances of government employees, leaving a trickle for social sector and development activities.

A note submitted by the Department of Personnel and Training (DoPT) to a parliamentary panel highlighted the fact that out of the total GDP of India amounting to 124.88 trillion, Rs 10.18 trillion is spent on paying salaries, etc.

The Committee on Estimates chaired by veteran BJP leader Dr Murli Manohar Joshi, while reviewing the performance of all India services, found that a huge expenditure was met on wages, besides the expenditure on building infrastructure like offices and houses for bureaucracy, rather on delivery.

The panel had actually asked the government to furnish details of total expenditure incurred on Indian Administrative Service (IAS) , Indian Police Service (IPS) and Indian Forest Service (IFS) officers posted at the Centre and in states and its share in the GDP. But the government while circumventing the request submitted an overall data related to all government employees without specifying services.

The 7th Pay Commission recommended a 23.55% overall hike in pay, pensions and allowances. It recommended a hike in minimum pay from Rs 7,000 to Rs 18,000 per month and maximum pay at Rs 2,25,000 per month and Rs 2,50,000 per month for the cabinet secretary and others at  the same level. The gratuity ceiling was enhanced from Rs 10 to Rs 20 lakh.

The system of pay bands and grade pay was dropped and a new pay matrix was recommended by the commission while a fitment factor of 2.57 was implemented. This would benefit employees in future on account of higher basic pay as the annual increments that they earn in future would be 2.57 times that at present. Separate pay matrixes were sketched for civilians, defence personnel and for military nursing services.

The commission recommended a revised pension formula for civil and defence personnel who had retired before January 1, 2016. The aim of the formula was to bring a parity between the past pensioners and current retirees. The past pensioners would be fixed in the new pay matrix based on their previous pay band and grade pay, at which they retired. The amount would then be raised by adding the number of increments earned while in service at the rate of 3%. 50% of the total amount arrived would be the new pension. An alternative calculation would be carried out, which would be the multiple of 2.57 times of the current basic pension. The pensioner would get whichever alternative would be higher.

The Commission also recommended introduction of the Performance Related Pay (PRP) for all categories of Central Government employees, based on quality Results Framework Documents, reformed Annual Performance Appraisal Reports and some other broad guidelines. The Commission has also recommended that the PRP should subsume the existing Bonus schemes.