The 7th Pay Commission hike – All you need to know

Raj Kamal Rao
File Photo: Finance Minister Arun Jaitley with Prime Minister Narendra Modi.

File Photo: Finance Minister Arun Jaitley with Prime Minister Narendra Modi.

Union Cabinet approved the recommendations of 7th Pay Commission in a Cabinet meet chaired by Prime Minister Narendra Modi on Wednesday.

In a much awaited announcement, Government has announced an overall 23.5 per cent hike to over 1 crore central government employees and pensioners.

Who will get salary hike?

All the central government employs including those working in PSU’s owned by Union Government. 33 lakh central government employees, 14 lakh armed forces personnel and 58 lakh pensioners will benefit from pay hike.

What are the Minimum /Maximum Salary slabs?

As per Cabinet’s approval, minimum salary of a government employee rises to Rs. 18,000 per month from current Rs. 7,000.

Higher up, the Union Cabinet Secretary will now get at Rs. 2.5 lakh salary per month from current Rs. 90,000.

Impact on Government

The pay hike approved by cabinet will cost the government’s exchequer Rs. 1.02 lakh crore. Of this amount 70% of payout will go from general budget and 30% from railway budget for railway employees.

Other Highlights of the Cabinet decision

  • The salary hike will apply retrospectively from January 1, 2016
  • It is the lowest ever basic hike in the last 70 years
  • Pay structure ensures 20% vacancy in government jobs
  • Gratuity ceiling increased from Rs. 10 lakh to Rs. 20 lakh now

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, the official said.

The pay panel, in November last year, had recommended a 14.27 per cent hike in basic pay at junior levels – the lowest in 70 years. The previous 6th Pay Commission had recommended a 20 per cent hike, which the government doubled while implementing it in 2008.