7th Pay Commission: Central government employees looking at yet another hike in minimum basic pay

Central government employees might be looking at one more salary hike by the beginning of next year. As per reports, National Anomaly Committee (NAC) is likely to convene for yet another meeting next month to take a final call on increasing the minimum basic pay for the central government staff.

Union government had increased the minimum basic salary for central government employees from Rs 7,000 to Rs 18,000 earlier this year in June based on recommendations of Seventh Central Pay Commission. The maximum basic pay was increased from Rs 80,000 to Rs 2.5 lakh on suggestions from the pay panel.

The staff members, however, were not very happy with this increase and wanted their minimum salaries to be increased to Rs 26,000. The 7th Pay Commission had suggested a fitment factor of 2.57 for minimum basic pay of central government employees, which employee unions thought was inadequate.

As per earlier details, the National Anomaly Committee is expected to increase the fitment factor for minimum basic pay from existing 2.57 to 3. Following the revision of fitment factor, the minimum basic pay for the central government employees will climb to Rs 21,000, as opposed to Rs 18,000 on recommendations from the 7th Pay Commission.

This might fall short of what the employee unions are gunning for, but will still benefit them greatly. Coupled with the recent increase in dearness allowance for the central government employees, their resultant paycheck will be a lot bigger than it is now.

The Union Cabinet had approved to increase dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners by one per cent. Now they receive dearness allowance at four per cent of their basic pay or basic pension. This hike in allowance will be effective from July 1, 2017.

The hike in allowances will put an additional burden of Rs 3068.26 crore every year on the nation's treasury. Even during the course of the current financial year, the exchequer will have to shell out Rs 2045.50 crore for implementing the increase in dearness allowance and relief between July 2017 and February 2018.

Reports suggest that the changes in minimum basic pay are expected to come into effect sometime around January 2018. This increase will benefit more than 50 lakh central government employees.