Seventh Pay Commission: An Overview

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1 ISSN (ONLINE): , ISSN (PRINT): Volume-5, Issue-6, December-215 International Journal of Engineering and Management Research Page Number: Seventh Commission: An Overview Dr. Vijay Kumar Assistant Professor, Department of Commerce, DSB Campus, Kumaon University, Nainital, Uttarakhand, INDIA ABSTRACT The union government of India vide Notification No1/1/213-e III(A)of appointed the seventh pay Commission to revise the Remuneration of Central government employee as well as pensioner of its government.the commission,after due deliberation, submits its report to the union government of India on 19 th November 215.The seventh pay Commission headed by justice Shri A. K. Mathur and ShriVivek Rae, Member, Dr. Rathinroymember and Smt. Meena Agarwal, worked as Secretary. AS per the Recommendations of VIIpay Commission16% hike in basic pay and 63% in allowances and Overall 23.55% hike in pay and allowances of government employee and 24% hike in Pension Commission has also Recommended ONE RANK ONE PENSION for civilian government employee too on line of OROP for armed forces. Recommendations of seventh pay Commission to be implemented from 1 th January 216.The Financial Impact of Implementing recommendation in to will be Rs1.2lakh crore. Out of this Rs 7365 crore are borne by the Union Budget and Rs 2845 crore by Railway Budget. The total Financial Impact will be from the Implementation of Commission Recommendation to raise the ratio of expenditure on salary and wages to GDP by.65% to.7%. Keywords--- Central Government Employee, Hike, Recommendations, Seventh pay Commission. I. INTRODUCTION Commission is set up by the Central government for compensation to their employees he against inflation indexed. To get a competent workforce, the government has laid down recruitment rules for recruiting persons who are efficient and competent. To improve efficiency, the government has from time to time Constituted Administrative Reforms Commission to suggest ways and means to improve efficiency in administration. The Central government of India has also, from time to time,set up various Commission for improving the pay structure of its employee so that they can attract better talent to public service. The background of commissions in brief are given below- First Commission- The first pay Commission was established under the Chairmanship of SrinivasaVaradachariar on January Commission had submitted its report to interim government of India on May Second Commission- The Second pay Commission was set up under the Chairmanship of Jagannath Das on August 1947 it was first pay Commission after the Independence of India. The recommendation of this pay commission had a financial impact of Rs 396 milion. Third Commission- The Third pay was headed by Raghubirdayal. Commission had Set up in April 197 and had submitted its in march The financial impact had of the report Rs1.44 billion. Fourth Commission- P.N.Singhal was the chairman of Fourth pay Commission, this Commission was Consituted in June,1983,Its report was given in three phases within four year. The financial burden to the government was Rs2.82billion. Fifth Commission- The fifth pay commission was set up in April 1994,but started functioning on May 1994.Fifth Commission was headed by the justice S.RatnavelPandian. With the Implementation of This Commission a huge burden was taken up by the Central government. It declare hike in salary of about 3.3 million. Sixth Commission- The Sixth pay Commission has been set up under the Chairmanship of Justice B.N. Srikrishna In July with a timeframe of 1.5 Years. The financial burden of the Recommendation was 5.5million. 183 Copyright Vandana Publications. All Rights Reserved.

2 ISSN (ONLINE): , ISSN (PRINT): Seventh Commission- The union government of India vide Notification No1/1/213-e III(A)of appointed the seventh pay Commission to revise the Remuneration of Central government employee as well as pensioner of its government.the commission,after due deliberation, submits its report to the union government of India on 19 th November 215.The seventh pay Commission headed by justice Shri A. K. Mathur and ShriVivek Rae, Member, Dr. Rathinroy member and Smt. MeenaAgarwal, worked as Secretary. AS per the Recommendations of VII pay Commission16% hike in basic pay and 63% in allowances and Overall 23.55% hike in pay and allowances of government employee and 24% hike in Pension Commission has also Recommended ONE RANK ONE PENSION for civilian government employee too on line of OROP for armed forces. Recommendations of seventh pay Commission to th be implemented from 1 January 216. The Financial Impact of Implementing recommendation in toto will be Rs1.2lakh crore. Out of this Rs 7365 crore are borne by the Union Budget and Rs 2845 crore by Railway Budget. The total Financial Impact will be from the Implementation of Commission Recommendation to raise the ratio of expenditure on salary and wages to GDP by.65% to.7%. II. METHODOLOGY For preparing the paper Researcher has deeply study of the Seventh pay Commission reports, recommendations, matrix and basis of fixation of Minimum salary. I have used for this paper absolutely Secondary Data, Which is collected from the seventh pay commission report, leading English as well as Hindi new paper, website and news channel. We also used many statistical tools, diagram for the analysis. III. OUR APPROACH The Seventh commission has submitted its report to the Finance Minister Arun Jaitely under the Chairmanship of Justice A.K.Mathur. The commission was set up by the UPA government In February 214.The Impact of Implementation the CPC are Detailed in Table - 1. Ratio 28-9 Sources- Seventh Commission Table 1 Impact of VI & VII CPC on macro-fiscal Statement Scenario (216-17) I II III and Allowances/GDP Pension/GDP PAP/GDP Increase PAP/GDP PAP/GDP( excluding railways) Increase in PAP/GDP PAP/RE (excluding railways) Increase in PAP/RE Impact the Implementation of VI CPC was that increase in PAP/GDP.62 and Increase in PAP/RE 4.32.The Impact will be implementation of VII pay Commission that to be Increase in PAP/GDP.46 and to be Increase in PAP/RE 4.25.If we Compare the impact of VI CPV and VII CPC,We will find that VII pay Commission lower than the VI pay Commission. 184 Copyright Vandana Publications. All Rights Reserved.

www.ijemr.net ISSN (ONLINE): 225-758, ISSN (PRINT): 2394-6962 Table -2 Various pay Commissions S.N. Commission Increase In % 1. II Central Commission 14.2 2. III Central Commission 2.6 3.

3 ISSN (ONLINE): , ISSN (PRINT): Table -2 Various pay Commissions S.N. Commission Increase In % 1. II Central Commission III Central Commission IVCentral Commission V Central Commission. 5. VI Central Commission VII II Central Commission 14.3 Sources- VII CPC Report Increase In % Increase In % Sources- On the Basis of VII CPC Report The above Table and diagram shows the increase over the previously set minimum pay. We find from the above analysis that VI CPC Increase high and II CPC,VII CPC Increase very low over the previously set minimum pay. The real increase works out to 14.3%(2.57/2.25=1.1429). The Minimum determined by the VII Commission, This is 2.57 times the minimum pay of Rs 7 fixed the government while implemented the VI CPC Recommendation from Table -3 Determination of Minimum pay - Commodity Per day Unit Per month 3 Unit Price/Unit Expenses S.N. PCU PCU Rs. Rs. 1. Rice/Wheat 475 Gm Kg Dal(Toor/Urad,Moong) 8 Gm 7.2 Kg Raw Vegetable 1 Gm 9. Kg Green Vegetable 125 Gm Kg Copyright Vandana Publications. All Rights Reserved.

4 ISSN (ONLINE): , ISSN (PRINT): Other vegetable 75 Gm 6.75 Kg Fruits 12 Gm 1.8 Kg Milk 2 Ml 18. Litre Sugar/Jaggery 56 Gm 5.4 Kg Edible Oil 4 Gm 3.6 Kg Fish 2.5 Kg Meat 5. Kg Egg 9. No Detergent etc Rs./month Clothing 5.5 Meter Total ( ) Fuel, Electricity and water Charges Total (15-16)Divided by Marriage, Recreation, festivals etc Total17-18)divided by Provided for skill by adding 25% to Sum(19+2). 18 Housing@ Total(21-22) Divided by.97 Step up 3% on No 23as D.A. is projected at 125% on Final Minimum as on (23+24) Rounding off Sources VII CPC Report A need- base Minimum wage for a single worker should cover all the needs of a workers family.the normative family is taken to consist of a spouse and two Children below the age of 14 Years. With the husband assigned 1 Unit, wife. 8 units and two children.6 unit each, the minimum wage needs to address 3 Consumption Unit (The norms are set by the 15 th Indian labor Conference (ILC)in 1957). The above table shows the calculation of Minimum as on To Calculation the minimum pay commission has set 7 steps Step 1: This step have been adopted on the basis of 15 th Indian labor Conference (ILC ) in this step food,clothing and detergent products listed and their respective quantities. [for e.g. for the product Rice/wheat the quantity specified for daily consumption is 475 grams per consumption unit per day. The monthly consumption of Rice/wheat 475#3=14.25kg#3= Step 2: Quantity of Rice/Wheat Multiply by the their prices.the prices of an items is the average of its prices prevailing in each month from July,214 June 215.[ Monthly expenditure on Rice /wheat Rs (42.75#25.93) Step 3.The cost of Food, Clothing and detergent products obtained from step 2 has been divided by.8 to arrive at a total, of which 2 percent provides for fuel and lighting expenses.( #.2/.8=234.5). Step 4. For recreation, ceremonies and festival cost are 15% of estimated cost from step 3 divided fromo.85( #.15/.85. Step 5. Step 4 is increase by 25% for the skill factor ( #25/ ) Step 6. The cost estimated from Step 5 is divided by.97 to arrive a total, of which 3% provide for housing expenses.( #.3/.97=524.7). Step 7. Dearness allowance is assumed 125% as on the expected day of implementation of the report. Actual dearness allowance as on 1 July, 215 was 119%. The Cost estimated step 6 has been increase by 3%(2.25/2.19=1.27 or nearly 3%). 186 Copyright Vandana Publications. All Rights Reserved.

5 ISSN (ONLINE): , ISSN (PRINT): Table 4 Comparison of Minimum and Maximum salary Central pay Commission Minimum salary Maximum Salary Comparative ratio Rs. Rs. I CPC ( ) :36.4 II CPC( ) 8 3 1:37.5 III CPC( ) :17.9 IV CPC( ) V CPC ( ) VI CPC(-28) 7 8 1:11.4 VII CPC ( ) :13.88 Sources-Seventh Commission Report Minimum salary Rs. Maximum Salary Rs Table 4 and diagram shows the Minimum and maximum salary recommended by the various commission. I CPC and II CPC Minimum and maximum salary are high other CPC ratio are average. Seventh pay commission Recommended average ratio of minimum and maximum. Table- 5 Rationalisation Applied in the Present Structure Band Grade Current Entry Rationalised 7 (2.57) 773 (2.57) 846 (2.57) 991 (2.57) Entry pay (2.57) Band 2 (93-348) Grade Current Entry (2.57) Copyright Vandana Publications. All Rights Reserved.

6 ISSN (ONLINE): , ISSN (PRINT): Rationalised 135 (2.62 Entry pay (2.57) 354 Band (2.62) (2.62) 476 Grade Current Entry Rationalised Entry pay (2.57) 21 (2.67) (2.67) 677 Band Grade Current Entry Rationalised 461 (2.57) 491 (2.67) Entry pay (2.57) HAG Current Entry 67 Rationalised 67 (2.72)=1822 Entry pay (2.72) HAG Current Entry 755 Rationalised 755 (2.72)=254 Entry pay (2.72) Apex 8 Fixed Rationasedpay 8 (2.81)=225 Cabinet 9 Fixed Secretary Rationased pay 9 (2.78)=25 Sources- Seventh Commission Above table shows the present pay structure and recommendation of VII CPC. Pa y Ba nd Gr ad e Pa y En try Pa y lev el ind ex 295 (2.67) (2.72) (2.62) 5 Table-5 Matrix for Civilian employee of Central government Copyright Vandana Publications. All Rights Reserved A

9 ISSN (ONLINE): , ISSN (PRINT): Sources- seventh Commission Report Table5 shows the matrix for pay Fixation In various level, it will help to calculation the present. Allowances All monetary benefits made by employer to his employee excluding salary are called allowances. It is fixed or pre-determined and given regularly in addition to salary in connection with the service rendered by the employee. it maybe given in form reimbursement of some expenditure incurred by the employee or may be given irrespective of actual expenditure. Allowances are paid over and above the basic pay of the employee. Either as a percentage of the basic pay, or as a specified Amount. Presently number of allowances paid to government employees in India is quite large, there are 196 Allowances are provided by the government with different, Seventh commission has proposed abolishing 52 allowances.another 36 allowances have been abolished as separate identities but subsumed either in an existing or new proposed allowances. Here we are discuss two allowances HRA and CEA House Rent allowance(hra)-recommendation of seventh pay commission as House rent allowance as follows While dearness allowance below 5 Percent HRA for X Class Cities 24% of Basic pay, For Y Class cities 16 % of Basic pay, and 8% of Basic pay for Z Class Cities. While dearness allowance above 5 Percent but below 1% HRA for X Class Cities 27% of Basic pay, For Y Class cities 18 % of Basic pay, and 9% of Basic pay for Z Class Cities. While dearness allowance exceed 1 Percent HRA for X Class Cities 3% of Basic pay, For Y Class cities 2 % of Basic pay, and 1% of Basic pay for Z Class Cities. Children Education allowance(cea) Seventh Recommendation Rs 15 # 1.5 =225, Whenever D.A. Increases by 5%,CEA shall increase by 25% Hostel Subsidy-Rs 45#1.5=675,Whenever D.A. Increases by 5%,CEA shall increase by 25% IV. CONCLUSION Recommendations of VII pay Commission16% hike in basic pay and 63% in allowances and Overall 23.55% hike in pay and allowances of government employee and 24% hike in Pension Commission has also Recommended ONE RANK ONE PENSION for civilian government employee too on line of OROP for armed forces. Recommendations of seventh pay Commission to be implemented from 1 th January 216. The Financial Impact of Implementing recommendation in toto will be Rs1.2lakh crore. Out of this Rs 7365 crore are borne by the Union Budget and Rs 2845 crore by Railway Budget. The total Financial Impact will be from the Implementation of Commission Recommendation to raise the ratio of expenditure on salary and wages to GDP by.65% to.7%. Implementation of Seventh Commission would boost to the Indian Economy, because Employees would have more amount to spend and saving. Further study- Due to the limitation of words for publish the paper and time limitation we could notcover various topic e.g. allowances, NPS,etc. REFERENCES [1] Seventh Commission Report [2] Website. [3] The Hindustan Times. Dated. Friday,November, 215. [4] Hindustan, Hindi news paper. Dated. Friday, November, 215 [5] Danik Jagran, Dated. Friday,November, 215 [6] Umar ujala,dated. Friday,November, 215 [7] V.K.Puri and S.K.Misra,Development and Planning,Himalaya Publishing House,214 [8] VI CPC Report. 191 Copyright Vandana Publications. All Rights Reserved.

A JUST MINIMUM WAGE. New Trade Union Initiative

A JUST MINIMUM WAGE. New Trade Union Initiative A JUST MINIMUM WAGE New Trade Union Initiative B-137 Dayanand Colony, First Floor, Lajpat Nagar IV, New Delhi 110024 Telephone: 011-26214538/26486931 Fax: 011-26481133 Email: secretariat@ntui.org.in Website: