Union Cabinet today gave its approval to the Terms of Reference of 7th Central Pay Commission( 7th CPC)

 The Union Cabinet today gave its approval to the Terms of Reference of 7th Central Pay Commission (CPC) as follows:-

 a)      To examine, review, evolve and recommend changes that are desirable and feasible regarding the principles that should govern the emoluments structure including pay, allowances and other facilities/benefits, in cash or kind, having regard to rationalization and simplification therein as well as the specialized needs of various Departments, agencies and services, in respect of the following categories of employees:-

            i.    Central Government employees-industrial and non-industrial;

            ii.     Personnel belonging to the All India Services;

            iii.     Personnel of the Union Territories;

            iv.    Officers  and   employees   of  the   Indian  Audit  and   Accounts Department;

            v.      Members of regulatory bodies (excluding the Reserve Bank of India) set up under Acts of Parliament; and

            vi.     Officers and employees of the Supreme Court.

 b)      To examine, review, evolve and recommend changes that are desirable and feasible regarding principles that should govern the emoluments structure, concessions and facilities/benefits, in cash or kind, as well as retirement benefits of personnel belonging to the Defence Forces, having regard to historical and traditional parities, with due emphasis on aspects unique to these personnel.

  c)      To work out the framework for an emoluments structure linked with the need to attract the most suitable talent to Government service, promote efficiency, accountability and responsibility in the work culture, and foster excellence in the public governance system to respond to complex challenges of modern administration and rapid political, social, economic and technological changes, with due regard to expectations of stakeholders, and to recommend appropriate training and capacity building through a competency based framework.

 d)     To examine the existing schemes of payment of bonus, keeping in view, among other things, its bearing upon performance and productivity and make recommendations on the general principles, financial parameters and conditions for an appropriate incentive scheme to reward excellence in productivity, performance and integrity.

 e)      To review the variety of existing    allowances presently available to employees in addition to pay and suggest their rationalization and simplification, with a view to ensuring that the pay structure is so designed as to take these into account.

 f)       To examine the principles which should govern the structure of pension and other retirement benefits, including revision of pension in the case of employees who have retired prior to the date of effect of these recommendations, keeping in view that retirement benefits of all Central Government employees appointed on and after 01.01.2004 are covered by the New Pension Scheme (NPS).

  g)      To make recommendations on the above, keeping in view:

  i.         the economic conditions in the country  and need for fiscal prudence;

 ii.        the need to ensure that adequate resources are available for developmental expenditures and welfare measures;

 iii.         the likely impact of the recommendations on the finances of the State Governments, which usually adopt the recommendations with some modifications;

 iv.    the prevailing emolument structure and retirement benefits available to employees of Central Public Sector Undertakings; and

 v.       the best global practices and their adaptability and relevance in Indian conditions.

  h)      To recommend the date of effect of its recommendations on all the above.

The Commission will make its recommendations within 18 months of the date of its constitution.  It may consider, if necessary, sending interim reports on any of the matters as and when the recommendations are finalised.

The decision will result in the benefit of improved pay and allowances as well as rationalization of the pay structure in case of Central Government employees and other employees included in the scope of the 7th Central Pay Commission.


Central Pay Commissions are periodically constituted to go into various issues of emoluments’ structure, retirement benefits and other service conditions of Central Government employees and to make recommendations on the changes required.

Cabinet likely to set 7th pay commission’s terms this week

New Delhi: The Cabinet is likely to set the terms of reference of the 7th Pay Commission this week, paving the way for salary revision of over 50 lakh central government employees.The matter will be finalised at the proposed meeting as the government wants to settle the matter before model code of conducts are notified ahead of the general election, scheduled in April-May this year.The government has already approved the composition of the commission for revision of salaries of central government employees, including Railways and Defence. It would also revise the remuneration for 30 lakh pensioners.

Former Supreme Court Judge Ashok Kumar Mathur, who also headed the Armed Forces Tribunal, will head the 7th Pay Commission. It has been mandated to submit its report in two years and its recommendations are to be implemented from January 1, 2016.

The other members of the Commission include Oil Secretary Vivek Rae (full time Member), NIPFP Director Rathin Roy (part- time Member) and OSD in Expenditure Department Meena Agarwal (Secretary).

In September, Prime Minister Manmohan Singh had approved the setting up of the Commission.

The government constitutes Pay Commission almost every 10 years. Often the revisions are adopted by states as well after some modification.

The 6th Pay Commission was implemented with effect from January 1, 2006, the fifth from January 1, 1996 and fourth from January 1, 1986.



Pay panel to suggest merger formula of DA and basic pay for central staff

24 February 2014

In a major boost to the Congress party’s vote bank ahead of the general elections, the central government has announced the terms of reference for the 7th Pay Commission, which include merging of dearness allowance (DA) with basic pay.

The merger of DA with basic salary is already due since the DA has reached 100 per cent against the 50 per cent trigger for merger. The merger will help in drawing higher allowances as these are a proportion of the basic pay.

The DA merger will benefit over 5 million central government employees, including 3 million pensioners. It is estimated that the merger will raise salaries by up to 30 per cent.

Since the Sixth Pay Commission did not recommend merger of DA with basic pay, salaries of central government staff have now equalled their DA.

Early this month, the central government announced the constitution of the 7th Pay Commission with Ashok Kumar Mathur, retired Supreme Court judge and retired chairman of Armed Forces Tribunal, as its chairman.

”The prime minister has approved the composition of the 7th Central Pay Commission,” a finance ministry release stated.

The announcement, came close on the heels of a 10 per cent hike in dearness allowance for the central staff, which raised total DA to 100 per cent of basic pay.

Central government employees have been pressing for the setting up of a pay commission after the DA rates touched 100 per cent of basic pay, double the percentage needed for merging DA with basic pay.

The Pay Commission will recommend a revised salary structure for central government employees – both in civil and military services.

Poll gift: UPA Govt plans to merge DA with basic pay

Ahead of the Lok Sabha Elections 2014, the UPA government at the centre is planning to woo its central government employees and pensioners by merging DA with the basic pay. According to the sources, the Union Cabinet may accept the proposal of merger of DA with basic salary as part of the terms of reference of the 7th pay commission. If accepted, the move will benefit around 50 lakh central government employees and 30 lakh pensioners in the country. It is along pending demand of Central government employees unions that besides raising the DA 100 percent it should be merged with the basic pay. As per the rule, DA is merged with basic pay when it crosses the 50% mark.

 It will result in 30-35 per cent hike in salary if 50 percent DA is merged with the basic pay. 

 Earlier, the central government had constituted the 7th pay commission before the Model Code of Conduct comes into the force in view of Lok Sabha Elections 2014, scheduled to be held in April-May.