7th CPC – A look at the Calculation on how the New Pay is derived…
For the Central Government Employees, the Pay Commission is a decadal harbinger of hope, outlining their salary increments for the next 10 years.
The starting point was the way government salary is structured. In the 6th CPC, there are three components: Pay Band, Grade Pay and Allowances. At present, there are four pay bands and 15 levels of grade pay.
The first pay band is Rs.5,200-20,200. Within this, there are five grade-pay progressions: 1,800, 1,900, 2,000, 2,400 and 2,800.
For example, Mr X got a job at this pay band. His basic pay would be Rs.7,000 (Rs.5,200 derived from the pay band andRs.1,800 as grade pay).
If he stays in the same designation, he would progress within a particular grade pay, with an annual increment of 3%. If he gets promoted, he would still be in same pay band, but will get a higher grade pay of Rs.1,900. In other words, to check the seniority of a government employee, ask their grade pay. The grade pay ranges from Rs.1,800 for Group C employees to Rs.10,000 for Group A officers.
The sum of pay band and grade pay is basic pay. Most allowances, notably dearness allowance (DA) and house rent allowance (HRA), are calculated on basic pay.
The Seventh Pay Commission assumed current DA of 125%. So Mr X would receiveRs.8,750 per month as DA (125% of Rs.7,000). The HRA quantum varies across cities. If Mr X lived in Delhi, he would get an HRA of 30% of basic pay, or Rs.2,100 per month.
Thus, the sum total of Mr X’s salary is Rs.17,850: Rs.7,000 basic pay, Rs.8,750 DA andRs.2,100 HRA. This is the lowest possible salary in central government service today.
The Seventh Pay Commission has recommended doing away with the system of pay band and grade pay. In its place come 18 levels, with 1 being the lowest and 18 the highest (cabinet secretary). Broadly, the 15 grade pays are matched with different levels. For example, grade pay of Rs.5,400—what an entry-level Group A officer would get—is now level 10.
The yearly increment is now called pay progression. For each level, the number of pay progression possible ranges from 1 to 40. If he doesn’t get promoted, Mr X will move from 1 to 40 over the next 40 years.
The 18 levels, representing a hierarchy, are arranged horizontally. Pay progression is arranged vertically. The combination of these two is the pay matrix, with 18 columns and 40 rows.
The Pay Commission combined the current basic pay and DA to derive the new basic pay. Next, it increased salary by 16% on this new basic pay. This amounts to 2.57 times the current basic pay. For Mr X, the new basic pay would be Rs.17,990, as compared to Rs.7,000 now. On top of this will be new HRA, calculated at 24% of basic pay.
Basic pay: Rs.7,000 (current); Rs.17,990 (recommended)
DA: Rs.8,750 (current)
HRA: Rs.2,100 (current); Rs.4,318 (recommended)
Total: Rs.17,850 (current); Rs.22,308 (recommended)
Mr X, because of the Seventh Pay Commission’s recommendation, will now see a 25% increase in salary.
With inputs from livemint.com