Wednesday, 29 June 2016

From PIB - Cabinet Approves 7 CPC: Some improvements for Defence Forces Personnel

Press Information Bureau
Government of India
29-June-2016 19:29 IST
Cabinet approves Implementation of the recommendations of 7th Central Pay Commission

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the implementation of the recommendations of 7th Central Pay Commission (CPC) on pay and pensionary benefits.   It will come into effect from 01.01.2016.

In the past, the employees had to wait for 19 months for the implementation of the Commission’s recommendations at the time of 5th CPC, and for 32 months at the time of implementation of 6th CPC.  However, this time, 7th CPC recommendations are being implemented within 6 months from the due date.

The Cabinet has also decided that arrears of pay and pensionary benefits will be paid during the current financial year (2016-17) itself, unlike in the past when parts of arrears were paid in the next financial year. 

The recommendations will benefit over 1 crore employees. This includes over 47 lakh central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the defence forces.


1.            The present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix as recommended by the Commission has been approved. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the Pay Matrix. Separate Pay Matrices have been drawn up for Civilians, Defence Personnel and for Military Nursing Service. The principle and rationale behind these matrices are the same.

2.            All existing levels have been subsumed in the new structure; no new levels have been introduced nor has any level been dispensed with. Index of Rationalisation has been approved for arriving at minimum pay in each Level of the Pay Matrix depending upon the increasing role, responsibility and accountability at each step in the hierarchy.

3.            The minimum pay has been increased from Rs.  7000 to 18000 p.m.  Starting salary of a newly recruited employee at lowest level will now be Rs.  18000 whereas for a freshly recruited Class I officer, it will be Rs.  56100.  This reflects a compression ratio of 1:3.12 signifying that pay of a Class I officer on direct recruitment will be three times the pay of an entrant at lowest level.

4.            For the purpose of revision of pay and pension, a fitment factor of 2.57 will be applied across all Levels in the Pay Matrices.

5.            Rate of increment has been retained at 3 %. This will benefit the employees in future on account of higher basic pay as the annual increments that they earn in future will be 2.57 times than at present.

6.            The Cabinet approved further improvements in the Defence Pay Matrix by enhancing Index of Rationalisation for Level 13A (Brigadier) and providing for additional stages in Level 12A (Lieutenant Colonel), 13 (Colonel) and 13A (Brigadier) in order to bring parity with Combined Armed Police Forces (CAPF) counterparts at the maximum of the respective Levels.

7.            Some other decisions impacting the employees including Defence & Combined Armed Police Forces (CAPF) personnel include :

·               Gratuity ceiling enhanced from Rs.  10 to 20 lakh. The ceiling on gratuity will increase by 25 % whenever DA rises by 50 %.

·               A common regime for payment of Ex-gratia lump sum compensation for civil and defence forces personnel payable to Next of Kin with the existing rates enhanced from Rs. 10-20 lakh to 25-45 lakh for different categories.

·               Rates of Military Service Pay revised from Rs. 1000, 2000, 4200 & 6000 to 3600, 5200, 10800 & 15500 respectively for various categories of Defence Forces personnel.

·               Terminal gratuity equivalent of 10.5 months of reckonable emoluments for Short Service Commissioned Officers who will be allowed to exit Armed Forces any time between 7 and 10 years of service.

·               Hospital Leave, Special Disability Leave and Sick Leave subsumed into a composite new Leave named ‘Work Related Illness and Injury Leave’ (WRIIL). Full pay and allowances will be granted to all employees during the entire period of hospitalization on account of WRIIL.

8.            The Cabinet also approved the recommendation of the Commission to enhance the ceiling of House Building Advance from Rs.  7.50 lakh to 25 lakh. In order to ensure that no hardship is caused to employees, four interest free advances namely Advances for Medical Treatment, TA on tour/transfer, TA for family of deceased employees and LTC have been retained. All other interest free advances have been abolished.

9.            The Cabinet also decided not to accept the steep hike in monthly contribution towards Central Government Employees Group Insurance Scheme (CGEGIS) recommended by the Commission. The existing rates of monthly contribution will continue. This will increase the take home salary of employees at lower levels by Rs. 1470. However, considering the need for social security of employees, the Cabinet has asked Ministry of Finance to work out a customized group insurance scheme for Central Government Employees with low premium and high risk cover.

10.        The general recommendations of the Commission on pension and related benefits have been approved by the Cabinet. Both the options recommended by the Commission as regards pension revision have been accepted subject to feasibility of their implementation. Revision of pension using the second option based on fitment factor of 2.57 shall be implemented immediately. A Committee is being constituted to address the implementation issues anticipated in the first formulation. The first formulation may be made applicable if its implementation is found feasible after examination by proposed Committee which is to submit its Report within 4 months.

11.        The Commission examined a total of 196 existing Allowances and, by way of rationalization, recommended abolition of 51 Allowances and subsuming of 37 Allowances. Given the significant changes in the existing provisions for Allowances which may have wide ranging implications, the Cabinet decided to constitute a Committee headed by Finance Secretary for further examination of the recommendations of 7th CPC on Allowances.  The Committee will complete its work in a time bound manner and submit its reports within a period of 4 months. Till a final decision, all existing Allowances will continue to be paid at the existing rates.

12.        The Cabinet also decided to constitute two separate Committees (i) to suggest measures for streamlining the implementation of National Pension System (NPS) and (ii) to look into anomalies likely to arise out of implementation of the Commission’s Report.

13.        Apart from the pay, pension and other recommendations approved by the Cabinet, it was decided that the concerned Ministries may examine the issues that are administrative in nature, individual post/ cadre specific and issues in which the Commission has not been able to arrive at a consensus.

14.        As estimated by the 7th CPC, the additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs. 1,02,100 crore. There will be an additional implication of Rs. 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16.


  1. As on date, under OROP Scales a Major with 20.5 years service gets a monthly pension of Rs 51,868 inclusive of 125% DR and Rs 500 FMA on an OROP basic of Rs 22,830. Under 7CPC Option 1 with multiplication factor of 2.57 his 6CPC Basic Rs 15,723, his total entitlement translates to Rs 40,908 after adding Rs 500 Medical Allowance. This is an example only, how many other cases will arise in all other ranks in the Armed Forces? Even on the delinked basic of 18,205 his monthly pension will be 47,287 per month under the 7CPC.

    1. @Manohar AM: Some of these issues were touched on seven months ago.

      Till the SAFI is issued, we can't be sure of anything.

  2. If you calculate the pension based on OROP scales and the 7CPC scale with a multiplication factor of 2.57 on the 6CPC basic [based on the PCDA (P) 6CPC Circulars], the later will be less than the OROP emoluments.

    1. Sir, why do you wish to use just the 2.57x calculation? That may yield pensions applicable to an index number of just one (minimum level) in the 7 CPC matrix. I have tried to illustrate the possible differences with a specific example of Wg Cdr pensions here

      The same sort of considerations would apply to pensioners in all ranks.

    2. @ashwanisarda,

      Probably written, like many do, without reading the complete PIB release. Don't get worked up. Forgive them that do not know....

  3. satyam ev jayate ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

  4. Sir. Serial 6 ' to bring parity with CAPF' takes the cake. Defence even below CAPF...

  5. This comment has been removed by the author.

  6. @ All readers, no comments are offered until I read the MoF Resolution published in the Gazette with details of what was approved, modified or rejected by the Cabinet because till then it is speculative.

  7. Sir,
    i have been a reader n follower of your blog for more thantwo years. My humble salute to the pioneer service of bringing the truth out by bring out the book twisting tale,,,but what is the way out sir till chiefs serving walking into the PM or supreme commanders office and stand for the service given them the privilege to lead and reach where they r , with out political directive on appropriate corrective measure with learned persons advice ..things are going to get worse ....i was a soldier and it hurts the way things are imploding service ....unless officers stand up and fight ..howa soldier is going to look upto the officer is going to implement discipline and morale onto the men he is commanding as on information is hidden....this is going to create further command n control issue with in the already supporting organizations are ruling the roost ..where a soldiers will stand .......What will happen to my mother land who stands of the valour and sacrifice of thou ....Jai Hind....

    1. From what I understand, the Chiefs had met with PMO as late as two days before the Cabinet met on 29 Jun 16. I do not know what was discussed and how much change resulted from their meeting. That probably may become known in the days to come.

      There is a lot of premature, inadequately understood information being spread on the social media. Aerial View is awaiting the Govt of India, Min of Fin's Resolution (just like the those after every CPC).

      This is needed to be able to understand what has been approved, what has not been agreed to, what has been changed and by how much, and finally what has been referred to the Committee on Allowances and Committee on Resolution of anomalies.

  8. This is yet another lost case.
    It is foolish to expect any change to this awful status. There is simply no chance of any parity, NFU or even OROP (for premature retirees). As Ganguly said about Shastri, one should not live in a fool's paradise !

    1. Are you IAS or IFS officer? Maybe Org Gp A from IDAS?

    2. @Raghu P...OROP for premature retirees has been accepted and implemented.

      @Raghu P.....OROP for premature retirees has been accepted and implemented.

    3. @Raghu,

      Instead of the underlying tone of hopelessness, perhaps it would be wiser to see what the Justice Reddy Committee recommends.

      If the MoD/RM insists on the PMR clause, then the very objectives of the Kargil Review Committee which submitted the Report in the tenure of the previous NDA Govt and the subsequent AVSC convened by the same Govt will stand nullified. Because nobody will take PMR/PSS and continue in service till they superannuate.

      As Alice in wonderland said there may be many miracles in the Justice Reddy Committee report, depending on who and how the rational thought is projected, devoid of histrionics and any more self-pity.

  9. Sir,
    My first post. Yet trying to comprehend political definition of OROP.
    In complete agreement with Air Mshl, may one say gather, understand the info n infer.
    We must continue our struggle. We definitely will reach where we started.