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All you want to know about the 7th Pay panel report

By BS Bureau
Last updated on: November 20, 2015 10:09 IST
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Emphasis is placed on simplifying the process of claiming allowances

Pay hikeIn a big bonanza to central employees and pensioners, the Seventh Pay Commission on Thursday recommended a 23.55 per cent increase in salary, allowances and pension along with a virtual one-rank-one-pension for civilians, involving an additional outgo of Rs 1.02 lakh crore (Rs 1.02 trillion) a year.

Here go the details:


  • Recommended date of implementation is January 1, 2016
  • Minimum monthly pay set at Rs 18,000
  • Maximum monthly pay Rs 2,25,000 (apex scale), Rs 2,50,000 (Cabinet secretary and equivalent)
  • Pay bands, grade pay abolished, new pay matrix designed
  • Rate of annual increment retained at 3%
  • Performance-related pay recommended for all categories


  • Total financial impact for FY2016-17: Rs 1.02 lakh crore (Rs 1.02 trillion)
  • Impact on FY17 Union Budget: Rs 73,650 crore (Rs 736.5 billion); Impact on Rail Budget: Rs 28,450 crore (Rs 284.5 billion)
  • Overall increase in pay, allowances, pensions: 23.55 per cent
  • Increase in pay: 16%; Increase in allowances: 63%, Increase in pension: 24%
  • Expenditure-GDP ratio to be impacted by 0.65% points vs 0.77% for 6th Pay Commission


  • Military service pay increased across board
  • Short-service commission officers exit at 7-10 years, with terminal gratuity equivalent of 10.5 months
  • SSC officers entitled to a fully-funded one year Executive Programme/M.Tech
  • Revised formulation for lateral entry/resettlement of defence forces personnel
  • Parity recommended between field and headquarters staff for similar functions
  • Systemic change in cadre review for Group A officers recommended


  • Recommends abolishing 52 allowances altogether
  • Another 36 allowances abolished as separate identities, but subsumed in existing allowances
  • Allowances relating to risk and hardship to be governed by the proposed Risk and Hardship Matrix
  • HRA recommended to be paid at the rate of 24%, 16%, 8% of new basic pay for class X, Y and Z cities, respectively
  • HRA to be revised to 27%, 18%, 9% respectively, when DA crosses 50%, and further revised to 30%, 20%, 10% when DA crosses 100%
  • Emphasis placed on simplifying the process of claiming allowances


  • Substantial increase for central government employees group insurance schemes’ monthly deduction and insurance amount
  • Introduction of a Health Insurance Scheme for employees and pensioners recommended


  • Revised OROP-type pension formulation for civil, defence and paramilitary employees
  • Enhancement in the ceiling of gratuity from Rs 10 lakh (Rs 1 million) to Rs 20 lakh (Rs 2 million)
  • Recommends reverting to a slab-based system for disability element
  • Revision of rates of lump sum compensation for next of kin to be applied uniformly to defence, civil, paramilitary personnel
  • Paramilitary personnel to be accorded martyr status in case of death in line of duty
  • Strong pension grievance redressal mechanism recommended

Illustration: Uttam Ghosh/

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