The government has notified a 2.57-time hike in basic salary of one crore government employees and pensioners following implementation of the 7th Pay Commission Recommendations.
The recommendations, which will cost the exchequer annually Rs 1.02 lakh crore, were notified in a gazette on Monday.
The minimum pay in central government with effect from January 1, 2016 will now be Rs 18,000 per month, up form Rs 7,000 per month. At the highest level of Cabinet Secretary, the salary would go up from Rs 90,000 a month to Rs 2.5 lakh.
"With regard to fixation of pay of the employee in the new Pay Matrix as on 1st day of January, 2016, the existing pay (Pay in Pay Band plus Grade Pay) in the pre-revised structure as on 31st day of December, 2015 shall be multiplied by a factor of 2.57," the notification said.
There shall be two dates for grant of increment, January 1 and July 1, every year instead of the existing July 1 only.
Employees will be entitled to only one annual increment on either of these two dates depending on the date of appointment, promotion or grant of financial upgradation, it said.
The Union Cabinet had last month accepted the recommendation of the Justice A K Mathur headed panel in respect of the hike in basic pay and pension but a decision on its suggestions relating to allowances has been referred to a Committee headed by Finance Secretary.
The Pay Commission had recommended abolition of 53 out of 196 allowances that the government employees currently get and moderation in several others.
"Till a final decision on allowances is taken based on the recommendations of this Committee, all allowances will continue to be paid at existing rates in existing pay structure, as if the pay had not been revised with effect from January 1, 2016," it said
The recommendations cover 47 lakh central government employees and 53 lakh pensioners. This include 14 lakh serving employees and 18 lakh pensioners in defence forces.
"The recommendations on Allowances (except Dearness Allowance) will be referred to a Committee comprising Finance Secretary and Secretary (Expenditure) as Chairman and Secretaries of Home Affairs, Defence, Health and Family Welfare, Personnel and Training, Posts and Chairman, Railway Board as Members," the notification said.
The Committee will submit its report within a period of four months.
In a written reply to a question in the Rajya Sabha, the Union Finance Minister Arun Jaitley said that while making its recommendations the 7th Pay Commission has duly taken into account the likely financial impact of its recommendations on the ratio of expenditure on Pay, Allowances and Pension (PAP) to gross domestic product (GDP) and the fiscal deficit target.
The Commission estimated 0.65 per cent increase in PAP as percentage of GDP in 2016-17 as a result of implementation of its recommendations and the total impact of its award is less than that of the 6th Pay Commission, he said.
"The Commission has, therefore expressed the view that this represents an extremely reasonable increase in PAP-GDP ratio in the initial year of the award and has felt that the macroeconomic impact of its recommendations is in conformity with the need for fiscal prudence and macro economic stability," Jaitley said.
Accepting the Pay Commission recommendation of maintaining existing formula and methodology for calculating Dearness Allowance, the government notification said, "The reference base for calculation of Dearness Allowance after coming into force of the revised Pay structure shall undergo change accordingly and will be linked to the average index as on January 1, 2016."
The notification provided for a consolidated pay package of Rs 4.5 lakh for Chairpersons of sector regulators.
These included Telecom Regulatory Authority of India, Central Electricity Regulatory Commission, Insurance Regulatory and Development Authority, Securities and Exchange Board of India, Competition Commission of India, Pension Fund Regulatory and Development Authority, Petroleum and Natural Gas Regulatory Board, Warehousing Development and Regulatory Authority, and Airports Economic Regulatory Authority of India.
The members of these regulators would get consolidated pay package of Rs 4 lakh a month.