CPC recommendations: Not much impact on central finances expected

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CPC

The seventh Central Pay Commission (CPC) on Thursday recommended a 23.55 per cent increase in salary, allowances and pension along with a virtual one-rank-one-pension scheme for civilians, involving an additional expenditure of Rs 1.02 lakh crore in the first year – Rs 73,650 cr from the Central Budget and Rs 28,450 cr from the Railway Budget
A minimum pay of Rs 18,000 per month and a maximum of Rs 2.5 lakh per month has been recommended by the Commission, headed by Justice A K Mathur, that presented its 900-page report to Finance Minister Arun Jaitley.
The recommendations, to be implemented from January 1, 2016, will benefit 47 lakh central government employees and 52 lakh pensioners – including staff of autonomous bodies, universities and public sector units, Jaitley said after receiving the report.
“In percentage terms, the overall increase in pay and allowance and pensions over the business-as-usual scenario will be 23.55 per cent,” the report said. Within this, the increase in pay will be 16 per cent, in allowances 63 per cent and in pension would be 24 per cent, it said. The total salary and pension bill of the central government, which will also include railway employees, will go up from an estimated Rs 4.33 lakh crore to Rs 5.35 lakh crore during 2016-17. The panel has suggested abolition of the pay band and the grade pay, though it retained the annual increment of 3 per cent. It has also recommended a fitment factor of 2.57 which will be applied uniformally to all employees.
The total impact of CPC’s recommendation will raise the ratio of expenditure on salary and wages to GDP by 0.65 percentage points to 0.7 percent .
The following are the highlights of the CPC report for the Armed Forces:
* Military Service Pay (MSP), which is a compensation for the various aspects of military service, will be admissible only for the defence forces personnel;
* MSP for service officers more than doubled to Rs 15,500 per month from Rs 6,000 currently; for nursing officers to Rs 10,800 from Rs 4,200; for JCO/ORs to Rs 5,200 from Rs 2,000 and for non-combatants to Rs 3,600 from Rs 1,000;
* Short service commissioned officers will be allowed to exit the armed forces at any point in time between 7 to 10 years of service; * Commission recommends abolishing 52 allowances; another 36 allowances subsumed in existing allowances or in newly proposed allowances.

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