New Delhi: The Union cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the implementation of the recommendations of 7th Central Pay Commission, a move that seeks to benefit over one crore central government employees and pensioners. Highlights of the Pay Commission benefits: 1. The present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix as recommended by the Commission has been approved. 2. Separate Pay Matrices have been drawn up for civilians, defence personnel and for military nursing service and all existing levels have been subsumed in the new structure. 3. The minimum pay has been increased from Rs 7,000 to Rs 18,000 per month. Starting salary of a newly recruited employee at lowest level will now be Rs 18,000 whereas for a freshly recruited Class I officer, it will be Rs 56,100. 4. Due to the decision, the salary/pension of all government employees/pensioners will be raised by at least 14.29 per cent as on January 1, 2016. 5. Rate of increment has been retained at 3 per cent. This will benefit the employees in future on account of higher basic pay.
6. The Cabinet approved further improvements in the Defence Pay Matrix by enhancing Index of Rationalisation for Level 13A (Brigadier) and providing for additional stages in Level 12A (Lieutenant Colonel), 13 (Colonel) and 13A (Brigadier) in order to bring parity with Combined Armed Police Forces (CAPF) counterparts at the maximum of the respective Levels. 7. Some other decisions impacting the employees, including Defence & Combined Armed Police Forces (CAPF) personnel, include -- Gratuity ceiling enhanced from Rs 10 lakh to Rs 20 lakh. The ceiling on gratuity will increase by 25 per cent whenever DA rises by 50 per cent. 8. The cabinet approved the recommendation of the Commission to enhance the ceiling of House Building Advance from Rs 7.50 lakh to Rs 25 lakh. 9. The cabinet, however, decided not to accept the steep hike in monthly contribution towards Central Government Employees Group Insurance Scheme (CGEGIS) recommended by the Commission. The existing rates of monthly contribution will continue. 11. The Commission examined a total of 196 existing Allowances and, by way of rationalization, recommended abolition of 51 Allowances and subsuming of 37 Allowances. The cabinet decided to constitute a committee headed by Finance Secretary for further examination of the recommendations of 7th CPC on Allowances. 12. The Cabinet also decided to constitute two separate Committees (i) to suggest measures for streamlining the implementation of National Pension System (NPS) and (ii) to look into anomalies likely to arise out of implementation of the Commission’s Report. 13. The additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs 1,02,100 crore. 14. There will be an additional implication of Rs 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16.