Seventh Pay commission- Certain important observations.

11th Bipartite

Pay commissions are appointed by the GOI headed by eminent personalities in

the field of Administration and Justice to decide the salary structure for their own

employees from the entry level of lowest cadre in the hierarchy to the level of

Cabinet Secretary – the topmost civil servant in the Govt. Setup.

The very idea of forming such commissions in a periodical interval is primarily to

carry out a holistic review on the global socio economic transformations and

relate such findings to the similar scenario of our country and suggest the

administrative reforms to attain such global standards and also to offer suitable

and acceptable compensation to the workforce who are employed to attain such

standards to ultimately compete and achieve excellence in achieving the


The recommendations of the seventh pay commission were fully accepted by the

GOI gives credentials to the methodology adopted for arriving compensatory

package for the various levels and there cannot be a second opinion to adopt the

same formula for the IBA too.

Let us quote from the Seventh Pay Commission report, which says, “What should

be the norms for governance? This has been a moot point through ages and the

norms of the governance have changed from time to time. If we go to the past

history of ancient India, we have many scriptures which have dealt with issues of

governance and those norms are also relevant in the present time. Bhagwat Gita

tackles many management issues at the grassroot level and offers feasible

solutions on the principles of value-based ethics, enlightened leadership and

human quality development. Bhagawat Geetha says Whatever action is performed

by a great man, common men follow in his footsteps. And whatever standards he


sets by exemplary acts, all the world pursues. It is further stated in the Gita

“where there is Dharma there is victory” or, in other words, success goes hand

in hand with righteousness. Chanakya also, in his celebrated discourse

“Arthashashtra,” emphasized that the Dharma Sukti is applicable to both, a

ruler and the common man. It is necessary to follow Dharma in all walks of

human life. Therefore, if we have a dedicated bureaucracy, then they will

provide a good leadership and good governance”.

Bank officers are much more dedicated and perform duties with greater risk and

accountability. So the salary should be commensurate with the risk and


The Seventh Pay Commission also says that, “In this 21st century, the global

economy has undergone a vast change and it has seriously impacted the living

conditions of the salaried class. The economic value of the salaries paid to them

earlier has diminished. The economy has become more and more consumer

economy. Therefore, to keep the salary structure of the employees viable, it has

become necessary to improve the pay structure of their employees so that

better, more competent and talented people could be attracted for governance.”

The Seventh Pay Commission has done exhaustive studies as seen below; “To

gain insight into the principles of emoluments, workshops were organized in

association with IIM, Bangalore, Administrative Staff College of India,

Hyderabad and SVP National Police Academy, Hyderabad. The local country

office of the World Bank was requested to provide inputs on best global

practices in remuneration. The World Bank team made several presentations

on relevant subjects, viz., international trends in public sector pay, allowances,

pension etc.”

“The expectation of employees in Government will be similar to ours that, “The

key expectation of employees at all levels is that there should be a significant

increase in their pay and improvement in other facilities.

“Representatives of some of the recognized organizations have staked their

claims for grant of a pay structure comparable to that of the private sector. At

the core of this demand is the economic development, the country has

witnessed in recent times, resulting in the avenues for talented young persons

having opened up; several of them are being hired by the private sector for

emoluments much higher than in the government sector.

The Commission bestowed its best of consideration and has dealt with all the

issues in appropriate chapters. It may be observed at the outset that

government service is not merely a contract service, it provides a status in

society which cannot be monetized in terms of money value.

The focus for the Commission was that emoluments should be such which

attract the right kind of talent by a transparent method, keeping in mind the

financial limitations of the government. The attempt has been to provide wages

commensurate with comfortable living. The pay structure should also need to

address any significant deterioration in real value of emoluments as a

consequence of inflation.”


“One should get proper and adequate compensation for his merit. The

increase in pay structure cannot keep pace with the market forces, at the

same time it should not be so unattractive that talent is not attracted to

government service.”

“Therefore, we have attempted a pay structure which has as its basis the

Aykroyd formula, which reflects the basic average cost of living in the

country. The attempt has been to arrive at a proper pay package so that

the essentials of life can be availed comfortably.”

The Pay Commission says “While finalizing the levels of salaries, allowances

and other perquisites of compensation structure, we have tried to take a

holistic approach. We also commissioned three studies by expert bodies

towards this end:

  1. Study by IIM, Ahmedabad to understand the nature and quantum of total

compensation of select job profiles in the government sector vis-à-vis

similarly placed profiles in the CPSUs and the private sector

  1. Study by Institute of Defence Studies and Analyses on nature, quantum

and components of defence expenditure and defence pension;

  1. Study by IIM, Kolkata on fiscal implications of implementation of the V and

VI CPC on the finances of the Union and State Governments.”

As the Pay Commission has adopted the principles to draw the wage structure

taking into account the salary structure of different sectors including the private

sector and the same has been accepted by GOI for implementation, the same

principles have to be followed by and for the Banking sector also.

th On stagnation, the 7 Pay Commission notes,

“The new pay structure has been laid out by and large broadly as an open

ended, layered matrix, for civilians as well as for the armed forces personnel.

It has been kept in view that a person should not stagnate but should have

fair opportunity to progress by dint of merit and secure better

emoluments so that frustration does not set in.

The prevailing rate of increment is considered quite satisfactory and has been

retained. The concept of separate grade pay has been done away with and the

grade pay at all levels has been subsumed into the pay matrix. The Modified

Assured Career Progression (MACP) scheme has been further modified. It is

expected that the present formulation will address the widespread

dissatisfaction prevailing in the earlier system, in which the gain or

progression through the MACP was considered inadequate.

The remuneration package is such that employees would feel that they are

valued and they are fairly paid and their remuneration is not less than a

person who is similarly situated in another organisation.”


The Pay Commission has also recommended that there is no need for

commission once in 10 years and it recommends as:

“It is also recommended that the matrix may be reviewed periodically without

waiting for the long period of ten years. It can be reviewed and revised on the

basis of the Aykroyd formula which takes into consideration the changes in

prices, of the commodities that constitute a common man’s basket, which the

Labour Bureau at Shimla reviews periodically. It is suggested that this should

be made the basis for revision of that matrix periodically without waiting for

another Pay Commission.”

On theNational Pension System the Commission says:

“We have also kept in view the needs of the pensioners under the old pension

system, (employees who joined before 01.01.2004) and suggested some

measures to alleviate their plight. They should also not be left in straitened


We have suggested their proper fixation in the new pay matrix which will

provide them a respectable living. Almost the whole lot of government

employees appointed on after 01.01.2004 were unhappy with the new

pension scheme.

While the National Pension System does not form a part of our Terms of

Reference, we have recorded the sentiments of the affected employees.

The government should take a call and step in to look into their


The Commission also talks about salary based on the status in the society. It says,

“As we have mentioned above, government service is not a contract. It is a

status. The employees expect a fair treatment from the government. The States

should play role model for the services. In this connection, it will be useful to

quote the observations in the case of Bhupendra Nath Hazarika and another vs.

State of Assam and others (reported in 2013(2)Sec 516) wherein the Apex Court

has observed as follows:” It should always be borne in mind that legitimate

aspirations of the employees are not guillotined and a situation is not

created where hopes end in despair. Hope for everyone is gloriously

precious and that a model employer should not convert it to be deceitful

and treacherous by playing a game of chess with their seniority. A sense

of calm sensibility and concerned sincerity should be reflected in every

step. An atmosphere of trust has to prevail and when the employees are

absolutely sure that their trust shall not be betrayed and they shall be

treated with dignified fairness then only the concept of good governance

can be concretized. We say no more.”

On issues related to vigilance and discipline the Commission says:

Lastly, we must emphasize that the government should inspire confidence

in the minds of civil servants that they will not be hounded by

unnecessary harassment by investigation agencies. The recent trend of


hounding civil servants as criminals for the failure of bona fide decisions

is not a happy one. This will discourage the bureaucracy to take bold

decisions in fear of being hounded if such a decision misfires. Any

misadventure should not be looked upon with suspicion unless it has

definite criminal intent to benefit either himself or someone else. If this

trend is not checked it will lead to disastrous consequences. The sole

consideration with the Commission was to ensure that employees do not

suffer economic hardship so that they can deliver and render the best

possible service to the country and make the governance vibrant and


On Child care leave the Commission has reiterated the earlier commission’s


Child Care Leave: Towards this end the Commission recommends that CCL

should be granted at 100 percent of the salary for the first 365 days, but at 80

percent of the salary for the next 365 days. In making this recommendation the

Commission has also kept in mind the fact the concept of a paid (whether 100%

or 80%) leave solely for child care for a period of two years, is a liberal measure

unmatched anywhere else. The Commission notes that in the event a male

employee is single, the onus of rearing and nurturing the children falls squarely

on his shoulders. Hence extension of CCL to single male parents is

recommended. Moreover, the Commission recognizes the additional

responsibility on the shoulders of employees who are single mothers.

Accordingly, it is recommended that for such employees, the conditionality of

three spells in a calendar year should be relaxed to six spells in a calendar


“Presently 30 days EL per annum is granted to Civilian employees and 60 days

to Defence personnel. EL can be accumulated up to 300 days in addition to the

number of days for which encashment has been allowed along with LTC”

However a recent Judgement of the High Court of Punjab and Haryana, it is ruled

that no accumulated leave can lapse. Hence the present ceiling should be

removed completely.

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