Thursday, June 30, 2016

Rs 85K crore bonanza for 1 cr central staff & pensioners - Pay Hike Gets Nod, Allowances To Be Reviewed

A big pay and pension hike that is expected to benefit 47 lakh central government employees and 53 lakh pensioners and is also expected to spur demand and act as a stimulant for the economy was cleared by the Union Cabinet on Wednesday.
After taking into account dearness allowances at prevailing rate, the salary, pension of all government employees, including pensioners, will increase by at least 14.29% as on January 1, 2016 and could go up to 23% in upper brackets. The fiscal impact of the implementation of the pay panel's recommendation would be Rs 72,800 crore every year and in the current fiscal year, it is expected to be Rs 84,933 crore. This inclu des the outgo on arrears with the implementation date being January 1, 2016. The government said it has planned for the outgo.
The government approved recommendations of the Seventh Pay Commission on pay and pension but deferred proposals on allo wances that will be examined by a committee headed by finance secretary Ashok Lavasa.
Pending the panel's decision, allowances will continue at existing rates. The pay commission called for scrapping of a large number of allowances but employee unions had urged the government to review these recommendations.
“The recommendations of the Pay Commission with respect to pay and pension, have been accepted by and large by the government. “And those recommendations will be implemented with effect from January 1, 2016, and the arrears would also be paid in this year,“ finance minister Arun Jaitley said.
The minimum pay has been increased from Rs 7000 to 18000 per month. Starting salary of a newly recruited employee at lowest level will now be Rs 18000 whereas for a Class I officer it will be Rs 56,100. For a secretary level officer the salary will increase from Rs 90,000 to Rs 2.25 lakh and for the cabinet secretary at Rs 2.5 lakh a month.
The government has accepted the Pay Commission recommendation of a fitment factor of 2.57 (the starting pay will be 2.57 times what was prevailing on 01.01.2006) which will be applied across all pay scales. Gratuity ceiling has been raised from from Rs 10 to 20 lakh.
The Pay Commission had examined a total of 196 existing allowances and recommended that 51of them be abolished and 37 should be subsumed.
Lavasa said there was also a recommendation on abolishing interest bearing allowances. He said the government has accepted the recommendation of abolishing advances on motor cars and motorcycles but interest bearing house building loans and computers will continue.The ceiling on the house building loan has been raised to Rs 25 lakh from Rs 7.5 lakh which is expected to provide a huge boost to the housing sector.
In order to ensure that no hardship is caused to employees, four interest free advances for medical treatment, TA on tour and transfer, TA for family of deceased employees and LTC have been retained.All other interest-free advances have been abolished.


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