Pay Commission

The Pay Commission is a committee constituted by the Government of India decennially, responsible for tabling recommendations regarding changes in the salary structure of federal employees, both civilian and defence. Established in 1947, seven pay commissions have been set up each decade since India's independence to review and provide recommendations on the work and pay structure of all the civil and military divisions comprising the Government of India. Headquartered in New Delhi, the commission is tasked with making its recommendations within 18 months from the date of its constitution. In January 2025, the formation of the Eighth Pay Commission received approval from the Prime Minister of India.

First Pay Commission

The first pay commission—established in January 1946—submitted its report in May 1947 to the Interim government of India. It was under the chairmanship of Srinivasa Varadachariar and comprised nine members. The mandate of the First Pay Commission was to examine and recommend emolument structure of the government's civilian employees.

Post War Pay Committee for the Indian Armed Forces

The emoluments structure of the Indian Armed Forces was determined not by the First Central Pay Commission but by a Departmental Committee consisting of service members. The task of this committee was to make recommendations "in the structure of emoluments and benefits of service personnel in the light of the recommendations made by the pay commission for civilian employees". The First Pay Committee, set up after the First Pay Commission, was called The Post War Pay Committee for the Armed Forces. The New Pay Code—effective from 1 July 1947—was based on the recommendations of this committee. The pensionary benefits were examined by a separate committee called the Armed Forces Pension Revision Committee (1949–50).

Second Pay Commission

The Second Pay Commission was set up in August 1957, 10 years after India's independence; it furnished its report after two years. The recommendations of the Second Pay Commission had a financial impact of ₹39.6 crores. The chairman of the Second Pay Commission was Jagannath Das.

Raghuramiah Committee

The Departmental Pay Committee, set up after the Second Pay Commission, was called, the Raghuramiah Committee (1960), which had representation from the armed forces too. It examined the emoluments of the armed forces and provided the necessary recommendations.

Third Pay Commission

The Third Pay Commission was constituted in April 1970 and presented its findings in March 1973. The Commission was chaired by Raghubar Dayal, a former justice of the Supreme Court of India, with Niharranjan Ray, A.K. Das Gupta, and V.R. Pillai as its members.

Fourth Pay Commission

Constituted in June 1983, its report was presented in three phases within four years and the financial burden to the government totalled ₹1282 crore. The chairman of the Fourth Pay Commission was P.N. Singhal, a former judge of the Supreme Court of India.

Fourth Pay Commission and the Armed Forces

The Congress (I) government, led by Rajiv Gandhi, introduced the concept of Rank Pay for armed forces officers following the recommendations of the Fourth Pay Commission. The Rank Pay, which ranged from ₹200 to ₹1,200, applied to officers from the rank of Second Lieutenant to Brigadier in the Indian Army, and equivalent ranks in the Indian Air Force and Indian Navy. Unlike an additional allowance, the Rank Pay was deducted from the officer's pay grade. This adjustment disrupted the established pay parity between military and police services. Police officers and officers from other All India Services with 14 years of service, who were previously in the same pay grade as Majors, were reclassified to Brigadier-equivalent grades under the new pay structure.

Fifth Pay Commission

The notification for the establishment of the Fifth Pay Commission was issued on 9 April 1994, but it became operational only on 2 May 1994, with the assumption of charge by the Member Secretary. The Chairman of the Fifth Pay Commission was S. Ratnavel Pandian, a former justice of the Supreme Court of India. The Commission's members included Suresh Tendulkar, a professor at the Delhi School of Economics, and M.K. Kaw, an officer of the Indian Administrative Service. The Fifth Pay Commission consisted of three members, with no military representation. The First Pay Commission had a secretary but no member secretary. Since the First Pay Commission, all subsequent pay commissions have had a member secretary, typically selected from the Indian Administrative Service. The final report of the Fifth Pay Commission was submitted for consideration before the Government of India in April 1997.

The Fifth Pay Commission report, spanning a massive tome, had nine parts in 172 chapters. Composition of the report took three years with a staff of 107, which eventually ballooned to 141. On the contrary, the Fourth Pay Commission involved the participation of 209 officials from various bureaucratic services, including the Indian Accounts Service, Indian Revenue Service, Indian Economic Service, Central Secretariat Service, Border Security Force, Geological Survey of India, Central Public Works Department, and the National Informatics Centre. The financial implications stemming from accepting the recommendations of the Fifth Pay Commission amounted to ₹17,000 crores.

Financial Impact of the Fifth Pay Commission

Other recommendations

One of its recommendations was to slash government workforce by about 30%. It also recommended the reduction of the number of pay scales from 51 to 34 and to not initiate recruitment of personnel for around 350,000 vacant positions in the Central Government. None of these recommendations were implemented.

Fifth Pay Commission and the Armed Forces

In its report submitted in January 1997, the Fifth Pay Commission recommended increasing the proportion of Armed Forces personnel in Group C and D posts within the Central Armed Police Forces (CAPFs) from 10% to 25%. For Short Service Commissioned Officers, the Commission also suggested reserving 25% of officer posts in the CAPFs upon completion of their military service. These recommendations aimed to reduce the defence pension bill, cut training and recruitment costs, provide trained manpower to government departments, and offer soldiers a second career after their military service.

However, the foregoing recommendations of the Fifth Pay Commission were largely ignored by the subsequent Janata Dal (United Front) and BJP government led by Atal Bihari Vajpayee. As a result, the issue remained unresolved, and the defence pension bill ballooned.

Sixth Pay Commission

In July 2006, the Cabinet approved the constitution of the Sixth Pay Commission. This commission—helmed by B.N. Srikrishna—was granted 18 months to table its recommendations. Journalistic reports had speculated that the additional cost of salary hikes under the Sixth Pay Commission would be around ₹20,000 crore for 5.5 million government employees. The Commission tabled its findings and recommendations in March 2008, which were subsequently approved by the Union Cabinet in August 2008.

Federal employees had threatened to go on a nationwide strike if the government failed to increase their salaries. The demand for hikes was driven by factors such as rising inflation and the growing wages in the private sector due to the forces of globalisation. Class 1 officers, particularly those in the Indian Administrative Service, were seen as grossly underpaid, with an administrative service officer amassing 25 years of experience earning only ₹55,000 as take-home pay. Pay arrears had been due from January 2006 to September 2008.

In 2008, nearly all government employees received 40% of the pay arrears, and the remaining 60%, as promised by the government, was credited to their accounts in 2009. The Sixth Pay Commission primarily aimed to eliminate ambiguities regarding various pay scales and focused on consolidating them into pay bands. It also recommended the abolition of the Group-D cadre.

Seventh Pay Commission

On 25 September 2013, the Government of India approved the constitution of the Seventh Pay Commission. Its recommendations were expected to be implemented with effect from 1 January 2016. A.K Mathur—a former justice of the Supreme Court of India—spearheaded the Seventh Pay Commission.

On 19 November 2015, the 7th Central Pay Commission recommended a 23.55% increase in pay and allowances, effective from 1 January 2016. On 29 June 2016, the Union Cabinet approved the Seventh Pay Commission’s recommendations, which were to be implemented from 1 January 2016. This, however, entailed a meagre 14% increase in salary after six months of intense evaluation and deliberation. Unlike previous pay commissions, the arrears were to be paid within the same financial year (2016-17). This was a significant departure from earlier practices, where arrears were paid in the following financial year. Additionally, employees had to wait only six months for the implementation of the Seventh Pay Commission recommendations, compared to 19 months for the Fifth Pay Commission and 32 months for the Sixth Pay Commission. However, the new pay structure did not apply to autonomous organisations such as CSIR, ICAR, and ICMR, which are under various ministries.

In 2017, the maximum amount that a Central Government employee could borrow for the construction or purchase of a new house or apartment unit increased to ₹25 lakh, up from the previous limit of ₹7.50 lakh. Employees can borrow up to 34 months of their basic pay, with a cap of ₹25 lakh, the cost of the house or flat, or an amount based on their repayment capacity—whichever is the lowest. If both spouses are central government employees, they can apply for the Housing Building Advance (HBA) either jointly or separately. Additionally, the interest rate on the HBA will be set at a simple interest rate of 8.50%.

Composition

In May 2014, a group of retired government officials challenged the inclusion of a senior IAS officer in the three-member Seventh Pay Commission in the Delhi High Court. They argued that this could result in an inherent bias in the commission's recommendations, favouring IAS officers over other government employees.

Seventh Pay Commission and the Armed Forces

The Seventh Pay Commission's recommendations caused concerns in the Armed Forces, particularly regarding the separate pay scales and allowances for the Armed Forces, Defence civilians, police, and other civil servants. While the Seventh Pay Commission provides for time-scale promotions at regular intervals (4, 9, 13, 14, and 16 years of service) for defence civilians, police officers, and others, no such provision exists for Armed Forces officers.

In March 2016, eighteen former heads of the Armed Forces, including General Ved Prakash Malik (former Chief of Army Staff) and Admiral Arun Prakash (former Chief of Naval Staff), sent a joint letter to the Prime Minister, expressing their concerns over the recommendations of the Seventh Pay Commission. However, the government issued instructions in July 2016, implementing the Seventh Pay Commission's recommendations on pay, including separate pay matrices for civilians and the Armed Forces, without any significant changes.

Eighth Pay Commission

On 16 January 2025, the Minister of Railways Ashwini Vaishnav announced the constitution of the Eighth Pay Commission.

See also

* One Rank, One Pension
* Rank Pay
* 7th Central Pay Commission (CPC) and Defence Forces
* Special Duty Allowance (SDA)

References

External links

Seventh Pay Commission, Official website

Report of the Sixth Central Pay Commission
Ministry of Finance

Pay Commission Key Pointswww.7cpc.in/
7th Pay Commission News for Central Government Employees">ttps://techautomobs.in/" target="_blank" class="mw-redirect" title="www.7cpc.in/">www.7cpc.in/
7th Pay Commission News for Central Government Employees
Latest News on Seventh Pay CommissionReference App for Central Government Employees

{{Ministry of Finance (India)

Government finances in India
Indian commissions and inquiries
1946 establishments in India
Wages and salaries
Ministry of Finance (India)