Introduction to the 7th Pay Commission

Have you ever wondered how the government determines and revises the salaries of its employees? Well, if you don’t know it yet, the Pay Commission is the institution behind the same, the seventh Pay Commission of India is the latest one. One can understand it as a government tool that is responsible for fixing salaries and other relative benefits for government employees.

• The commission thoroughly studies the prevailing economic conditions like inflation, consumption, market, and more to suggest salary revisions.
• Srinivasa Varadacharia headed the first Pay Commission, established in 1946. Ever since then, the government has been setting up pay commissions regularly to recommend pay scales and other central employee benefits. Authorities have constituted a total of seven pay commissions until now.

Understanding the 7th Pay Commission Matrix

The 7th Pay Commission introduced several new concepts in its report, and the 7th Pay Commission matrix was one of them. The introduction aimed to make the pay scale more transparent and simple for all central government employees.

They designed the pay matrix table with a total of 760 cells, comprising 19 columns and 40 rows. The table lays out the pay scale and progression of all the government employees. The horizontal blocks reflect the pay scale of

Components of the pay matrix

Grade pay:

The compensation level of a government employee following his roles and responsibilities determines his/her grade pay.

Pay band:

The salary range of an individual following his grade pay is the pay band.

Calculation of pay matrix:

You can simply calculate one’s pay matrix by interesting their points of pay grade and bay band.

Key Dates and Timeline of the 7th Pay Commission

Commission Set-up and Members

The UPA-led government instituted the 7th Pay Commission on 28 Feb 2014. Ashok Kumar Mathur chaired it, and notable members like Meena Agrawal (secretary), Shri Vivek Rai, and Dr. Rathin Roy constituted the 7th Pay Commission.

Objectives and Report Submission

The commission played quite an important role in preparing a chart of all government personnel. This in turn, also helped the government to understand the size and profile of their employees.

The committee took a year and six months to prepare its report, submitting it on November 19, 2015. The recommendations mentioned in the report came into effect on 1st January 2016.

Milestones/ Significant Changes by the 7th Pay Commission

Minimum Pay Scale

They suggested starting the minimum pay for new government recruits from INR. 18,000. Additionally, the pay scale for class 1 officers was to be at least INR. 56,100.

Maximum Pay Scale

They also fixed the maximum pay limits for high-level government employees at around INR 2,50,000 lakhs.

7th Pay Commission Matrix

They introduced a new concept of pay matrix, replacing old ideas like grade pay. This 7th pay commission chart listed the payment level and expected benefits and progression of all government employees on different levels.

Performance Related Pay

They introduced Performance-related Pay as a component of salary progression, where individuals were supposed to receive increased income or pay benefits based on their performance assessment.

Breakdown of Salary Slabs in the 7th Pay Commission

The new payment structure is a breakdown of different components like basic pay and allowances. It reflects the total salary and relative benefits offered to an individual by the government.

Basic Pay

This refers to the base salary offered to an individual and consists of a major proportion of the total income. The basic pay of a government employee depends on his level and experience. It is always fixed and subject to taxation.

Allowances

Allowances can be understood as additional benefits given to an individual to cover certain expenses for working in a specific condition. The 7th pay commission salary slab mentions several allowances like Travel allowances, Dearness Allowances, Medical Allowances, and more.

Dearness Allowance

Dearness Allowance can be simply understood as some proportion of your primary income that is additionally offered to a government employee to bear the inflationary costs.

House Rent Allowance

To help central employees with their renting costs, the govt. also provides house rent allowances. The House Rent Allowance varies on the residence of individuals. For instance, for people residing in X, Y, and Z cities, it is 24%, 16%, and 8% respectively.

Explaining the Purpose and Function of the 7th Pay Commission

• The Seventh Pay Commission of India aims to understand all the financial requirements of government personnel.
• In addition to providing a basic salary, the government provides additional income in the form of allowances like Dearness allowance to sustain inflation, house rent and travel allowance to reduce economic burden. Government employees are also provided with medical allowance and child education allowance to enhance their living conditions.
• The seventh pay commission of India aims to properly understand the hikes, market competitiveness, and other factors to offer maximum benefits to all government personnel.

Comparison with Previous Pay Commissions

Government employees are also provided with medical allowance and child education allowance to enhance their living conditions. Here’s a list of all-pay commissions.

Pay Commission	Year	Head
First	1946	Srinivasa Varadacharia
Second	1957	Justice Jagannadha Das
Third	1970	Justice Raghubir Dayal
Fourth	1983	P.N Singhal
Fifth	1994	Justice S. Ratnavel Pandian
Sixth	2006	B.N Srikrishna
Seventh	2014	Justice Ashok Kumar Mathur

Notable Advancements in the seventh payment commission of India:

• The minimum pay for the new govt recruits shifted from INR. 7000 to INR. 18,000.
• Annual increments witnessed no change and stood at 3% only.
• They revised and significantly increased the pensions of retired employees. They shifted the minimum pension to INR. 9,000 from INR. 3,500.
• The 7th Pay Matrix came into play, determining individuals’ payment and progression based on their matrix levels.
• Gratuity witnessed a hike to 20 lakhs that was earlier INR. 10 lakhs only.

Rollout and Implementation of the 7th Pay Commission

01. 01. 2016 was the 7th pay commission implementation date. It took around 6 months to roll out the benefits.

Implementation phases:

They implemented distinctive phases across different sectors to carry out the recommendations of the 7th CPC and ensure smooth transitioning. This step-by-step change helped the government reduce their economic burden.

Implementation in Payment

To provide a better life to central employees, they increased the minimum payment from 7,000 to 18,000.

Implementation in Pension

The Pension of the retired officials was also engaged by 23. 6%.

Implementation in Allowances

Dearness and House Rent Allowances were enhanced. Additionally, they introduced Medical Allowances and child education allowances.

Challenges in implementation

Just like any other government program, the 7th pay commission pay scale also faced some challenges in its implementation.

Fiscal Burden on Govt

According to data and statistics put forward by several news channels and agencies, the govt. faces a bit of economic burden every time it implements the benefits of pay commission. Implementing the sixth CPC saw the fiscal deficit increase to 6.5% in the year 2010.

The government carried out the implementation in different phases. This segregation and fixation of payment scale helped reduce the economic strain on the government in the long run.

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Pay Scales Defined by the 7th Pay Commission

The seventh pay commission of India introduced 18 levels in the pay matrix. Individuals were offered a specific pay scale based on their roles and responsibilities within each level, determining their placement in different pay bands and grades.

• For instance, Level 1 to 5 has a grade pay of 1800 to 2800 with a PB scale of 5200 to 20,200.
• Level 6 to 9 has a grade pay of 4200 to 5400 with PB-2 of 9300 to 34,800.
• Level 10 to 12 has a grade pay of 5400 to 7600 and their PB-3 ranges between 15,600 to 39,100.
• The grade pay of Level 13 to 14 ranges between 8700 to 10,000 and their PB-4 lies between 37,400 to 67,000.
• Level 15 to 18 has no grade pay but hag scales.

Pension Revisions under the seventh pay commission

Pension revisions:

• The 7th Pay Commission chart proposed significant changes and advised revising pensions every five years, with a minimum pension of Rs. 9,000 per month.
• For those who served for more than 33 years, the Commission suggested fixing their pension at 50% of their last drawn salary.
• The Commission also introduced the “One Rank One Pension” (OROP) concept. It helped ensure equal pensions for retired defence personnel of the same rank and service year regardless of their retirement date.

Impact of Pension Revisions

• These 7th pay commission pension modifications were well-received by retired government employees, providing them with much-needed financial security.
• The pension of all pre-2016 pensioners was increased by 2.57 times. Additionally, the family pension was also revised and increased to 50% of the employee’s last pay drawn, and the ceiling on gratuity was raised from Rs. 10 lakhs to Rs. 20 lakhs.

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