Tuesday, November 17, 2015

7th Pay commission

7th Pay commission
Report of 7th pay panel may not be having satisfying recommendations
As per news reports 7th pay commission is going to submit its report on 20th November 2015 and 15 % average hike is recommended
The Pay Commission, if it followed the methods adopted by previous pay commissions to compute the increase to be recommended for revision of pay and allowances of government servants, minimum 40% increase can be recommended.
But According to the Medium-Term Expenditure Framework Statement tabled by Finance Minister Arun Jaitley in Parliament said
“The salary outgo of central government employees will go up by 9.56 per cent to Rs 1,00,619 crore in current fiscal.The pace will increase further in 2016-17 at 15.79 per cent to Rs 1.16 lakh crore with the likely implementation of the 7th Pay Commission award” So there are two possibilities for calculating Fitment Formula
1. As per the Finance Minister Statement the increase will be 15 %
2. All the Federations demanded for 40 to 60 % hike, but minimum 30 % increase is expected.
Accordingly The Fitment formula for the above two estimates is worked out below
Present DA = 119%
Expected DA from from January 2016 =6%
Total Da =125 %
DA has to be neutralized to arrive Revised Pay from 1.1.2016, if so Multiplication factor will be 2.25
If 30% increase is recommended-
The Fitment formula = 2.25 + (2.25×30/100) = 2.92
Minimum Basic will be Rs.7000 x 2.92 = Rs.20440
If 15% increase is recommended-
The Fitment formula = 2.25 + (2.25×15/100) = 2.58
Minimum Basic will be Rs.7000 X 2.58 = Rs.18060
Minimum Pay to be recommended according to the above estimates by 7th Pay commission will be either Rs.20000 or Rs.18000
However, we have to wait to know the exact increase recommended by 7th pay commission till the date of the report is made public.
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