Central staff, pensioners to get revised pay and arrears in August

The finance ministry on Friday said the arrears of pay and allowances of the nearly 10 million central staff and pensioners for the first seven months (January-July 2016), as per the 7th Pay Commission recommendation, will be paid in cash in one installment along with the salary for August 2016.

The central government will thereby also be injecting nearly Rs60,000 crore into the economy, in what could bring cheer to the market and a million employees and pensioners.

The financial impact of the recommendations in the 2016-17 financial year will amount to Rs1,02,000 crore. Of this, the increase in pay would account for Rs39,100 crore, increase in allowances for Rs29,300 crore and increase in pensions for Rs33,700 crore.

The revised pay structure of the central staff, which is effective from 1 January 2016, will also include dearness allowance at 125 per cent of the pre-revised pay scale.

After taking into account the DA at prevailing rate (125 per cent of basic pay), the salary / pension of all government employees / pensioners will be raised by at least 14.29 per cent as on 1 January 2016.

The rate of the first installment of DA under revised pay will be announced later.

"The arrears as accruing on account of revised pay consequent upon fixation of pay under CCS (RP) Rules, 2016 with effect from January 1, 2016, shall be paid in cash in one installment along with the payment of salary for the month of August 2016, after making necessary adjustment on account of GPF and NPS, as applicable, in view of the revised pay," a finance ministry statement said.

The Pay Commission had, in November 2015, recommended increases of 16 per cent in salaries and 24 per cent in pensions, with an overall hike of 23.55-per cent in salaries and pensions of central government employees.

The starting salary for new recruits at the lowest level has been raised to Rs18,000 from Rs7,000 per month. Freshly recruited Class I officers will receive Rs56,100. This represents a ratio of 1:3.12 signifying that the pay of a Class I officer on direct recruitment will be three times the pay of an entrant at the lowest level.

To expedite disbursement of arrears, it has been decided that arrear claims may be paid without pre-check of fixation of pay in revised scales of pay, the ministry said in a circular.

However, facilities to disburse arrears without pre-check of fixation of pay will not be available for government servants who have relinquished service on account of dismissal, resignation, discharge, retirement, etc, after date of implementation of Pay Commission's recommendations.

The union government recently issued notification for the implementation of the 7th Pay Commission recommendations related to the hike in basic pay and pension.

With the publication of a notification, dated 25 July 2016,  around 10 million individuals - 3.3 million central government employees, 1.4 million armed forces personnel, and 5.2 million pensioners will get the increased payout for their August salaries.

 The 7th Pay Commission recommendations on basic pay and pension hike will be effective from 1 January 2016, according to the gazette.

 The rate of increment has been retained at 3 per cent. This will benefit the employees in future on account of higher basic pay as the annual increments that they earn in future will be 2.57 times than at present.