Union Cabinet has approved the recommendations of the 7th Pay Commission. Briefing media in New Delhi this evening, Finance Minister Arun Jaitley said the recommendations will be implemented from 1st January 2016 and arrears will paid this year itself.

He said the Pay Commission covers 47 lakh government employees and 53 lakh pensioners out of which 14 lakh employees and 18 lakh pensioners are from defence force. 

The Minister said, entry level salary for government employees will be 18 thousand rupees against the existing 7000 rupees per month, whereas the highest level will be two lakh 50 thousand rupees against the existing 90 thousand rupees. 

Minimum pension will now become 9000 rupees against the existing monthly pension of 3500 rupees. Mr Jaitley said based on minimum pay, fitment factor of 2.57 has been approved for revising pay of all employees uniformly across all levels. 

The rate of annual increment has been retained at 3 per cent. Gratuity ceiling has been enhanced from 10 to 20 lakh rupees. 

The ceiling on gratuity will increase by 25 per cent whenever DA rises by 50 per cent. He said the total financial impact in the current financial year due to the implementation of the Pay Commission is likely to be 1.02 lakh crore rupees. He said efforts have been made to bring government salaries closer to private sector salaries.


Rates of Military Service Pay have also been revised to 3600, 5200, 10800 and 15500 rupees a month for various categories of Defence personnel. Mr Jaitley informed that 7th Pay Commission recommendations on Allowances will be referred to a Committee headed by Finance Secretary.

In the meantime, the existing allowances will continue. The Minister also announced setting up of a Committee to look into anomalies which may result from the implementation of the Pay Commission recommendations. 

When asked about the proposed strike by employees unions from 11th of next month, Mr Jaitley said that the government salaries are now decent and it is more attractive as compared to the private sector. 

He said, there is no justification for the strike by the unions over Pay Commission. Mr Jaitley also said that the government believes that the salaries of the employees should be at respectable level so that talent could be attracted for government jobs. The Finance Minister also said, the pay hike will boost consumption and demand. The House Building Allowance (HBA) has also been hiked from 7.5 lakh to 25 lakh rupees. #casansaar