Cabinet sets agenda for 7th Pay Commission

The union cabinet today gave its approval to the terms of reference of the 7th Central Pay Commission (CPC) that would examine, review, evolve and recommend changes that are desirable and feasible regarding the principles that should govern the emoluments structure, including pay, allowances and other facilities/benefits of the various departments and agencies of the central government.

The commission will look for ways to rationalise and simplify the emolument structure as well as the specialised needs of various departments, agencies and services, in various categories of employees, including industrial and non-industrial, all India services, personnel of the union territories, officers  and  employees   of  the   Indian  Audit  and   Accounts Department, members of regulatory bodies (excluding the Reserve Bank of India), set up under Acts of Parliament and officers and employees of the Supreme Court.

The commission will also examine, review, evolve and recommend changes in retirement benefits of personnel belonging to the defence forces, having regard to historical and traditional parities, with due emphasis on aspects unique to these personnel.

The commission has been asked to work out the framework for an emoluments structure linked with the need to attract the most suitable talent to government service, promote efficiency, accountability and responsibility in the work culture, and foster excellence in the public governance system to respond to complex challenges of modern administration and rapid political, social, economic and technological changes, with due regard to expectations of stakeholders, and to recommend appropriate training and capacity building through a competency based framework.

It would examine the existing schemes of payment of bonus, keeping in view, among other things, its bearing upon performance and productivity and make recommendations on the general principles, financial parameters and conditions for an appropriate incentive scheme to reward excellence in productivity, performance and integrity.

The commission would review the variety of existing  allowances currently available to employees in addition to pay and suggest rationalisation and simplification, with a view to ensuring that the pay structure is so designed as to take these into account.

It would examine the principles which should govern the structure of pension and other retirement benefits, including revision of pension in the case of employees who have retired prior to the date of effect of these recommendations, keeping in view that retirement benefits of all central government employees appointed on and after 1 January 2004 are covered by the New Pension Scheme (NPS).

While making the recommendations, the commission will keep in view the following:

• The economic conditions in the country  and need for fiscal prudence;
• The need to ensure resource availability for developmental expenditures and welfare measures;
• The likely impact of the recommendations on the finances of the state governments;
• The prevailing emolument structure and retirement benefits available to employees of central public sector undertakings; and
• The best global practices and their adaptability and relevance in Indian conditions.

The commission has been asked to make its recommendations within 18 months of the date of its constitution.  It may consider, if necessary, sending interim reports on any of the matters as and when the recommendations are finalised. 

The decision will result in improved pay and allowances as well as rationalisation of the pay structure in case of central government employees and other employees included in the scope of the 7th Central Pay Commission.

The Central Pay Commissions are periodically constituted to go into various issues of emoluments' structure, retirement benefits and other service conditions of central government employees and to make recommendations on the changes required.