Govt. approves Sixth Pay commission report

Independence Day gift for Govt. Employees

Good news for Central Government employees and defence forces. UPA Government has approved the 6th Pay commission report which was submitted to it in March,2008. The Six Pay commission was headed by Justice B N Srikrishna.

Highlights of Sixth Pay Commission Report

  • The average increase in salaries is to the tune of 21%.

  • The hike is with effect from January 1,2006. You can download the Salary Calculator spreadsheet to find out your Revised Salary after the pay hike.

  • The hiked salary would be given to the employees beginning September this year and the arrears from January 2006 would be given in cash in two installments - 40 per cent this fiscal and 60 per cent in 2009-10.

  • The government has increased the minimum entry level salary of a government employee to Rs 7,000 against Rs 6,660 recommended by the Commission.

  • The rate of Annual Increment has also been increased from 2.5% to 3%.

  • At least three assured promotions for all defence forces personnel and civilian employees under the modified Assured Career Progression scheme.

  • While civilians would get this after 10, 20 and 30 years of service, defence forces jawans would be promoted under ACP after 8, 16 and 24 years.

  • The government has also approved Military Service Pay for armed forces personnel, under which officers would get Rs 6,000 over and above their pay per month.

  • The lowest limit of disability pension for defence personnel has been doubled to Rs 3100 a month.

  • The Revision in pay structure would increase the total emoluments of an employee at the lowest level beyond Rs. 10,000 per month (including allowances)

  • In a significant modification of the Pay Commission recommendation, the government has raised the fitment rate, which helps in arriving at higher allowances in view of merger of 50 per cent DA with basic pay, in revised pay bands to 40 per cent as against 28 per cent.

Impact of Pay Commission recommendations

  • Well, this is a three cheers news for the Central government employees as well as the armed forces since they would get 21% higher pay than what they used to get earlier. Their friends in private sector may feel jealous about it.

  • Since a large chuck of the Government employees come under the Middle Class segment, this would help increase their purchasing power and hence standard of living. The arrears from January,2006 would be an additional bonus and would mainly be used as saving corpus.

  • The Pay hike would cost the exchequer Rs 22,131 crore -- Rs 15,717 crore on the General Budget and Rs 6,414 crore on the Railway Budget -- in 2008-09. This would increase the fiscal deficit as a % of GDP.

  • The government would have to find additional sources of funds to bridge the deficit. Since the Macro environment is already worsening due to higher inflation, lower IIP and lower GDP growth estimates, the pay revision would be an additional challenge for the government.

  • Download Your Salary Calculator

  • Download Sixth Pay commission Report

  • Update:

    Salary Calculator (Modified as per Cabinet approved recomendations ) from Staff Corner ( Click below to download

  • Sixth Pay Commission Calculator Option 1

  • Sixth Pay Commission Calculator Option 2

    Anoop said...

    What will be the impact on stock market ? Is today's fall in response to this ?

    Unknown said...

    Private sector employees are still far better in terms of pay package though they loose on work life balance.

    Anonymous said...

    Are state government employees also covered in this pay there separate commission report for them. when is the next revision due for state govt employees.


    Anonymous said...

    Hi Rajesh,
    Thanks for the excellent writeup. I agree that govt. has been quite liberal in rewarding the middle class as they have an eye for the upcoming elections. However, you are correct that for stock markets this is not a good news. Fiscal deficit is surely going to keep the finance minister on his toes.

    Unknown said...

    Don't get shocked if the vegetable vendors increase the prices from :)

    Anonymous said...

    Has the commission recommended something on the performance appraisal sytem in govt deptt. and ways to improve it. We always talk of comparing salaries of Govt. employees with private sector...but has anyone thought of comparing the performance measurement metrics long would we feeds these guys with taxes paid from our hard earned money

    A private sector employee

    Anonymous said...

    Good time to ask my PSU friends for a treat ...yum !!!

    Anonymous said...