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The government is not considering setting up 8th Pay Commission for central government employees, Minister of State for Finance Pankaj Chaudhary informed Lok Sabha on Monday.
"No such proposal is under consideration with the government for constitution of 8th Central Pay Commission for the central government employees," Chaudhary said in a written reply to a question if the government proposes to ensure timely constitution of Pay Commission for central government employees so that it could be implemented on January 1, 2026.
ln order to compensate central government employees for erosion in the real value of their salaries on account of inflation, dearness allowances (DA) is paid to them and the rate of DA is revised periodically every six months on the basis of rate of inflation as per All lndia Consumer Price lndex for Industrial Workers released by Labour Bureau under the Ministry of Labour & Employment, he said.
The government had set up 7th Pay Commission in February, 2014. The recommendations of the panel were effective from January 1, 2016.
What is a Pay Commission?
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A Pay Commission is a body set up by the government to recommend changes to the salary structure of government employees. It was first constituted in January 1946 and submitted its report in May 1947, under the chairmanship of Srinivasa Varadachariar.
The Commission is usually given 18 months to submit its recommendations. It reviews and makes suggestions for the pay structure of civil as well as military divisions of the government of India. It is headquartered in New Delhi.
The recommendations are based on several factors including inflation. The dearness allowance (DA), fitment factor as well as basic pay are discussed in the commission's report.
In 2013, then finance minister P Chidambaram announced the setting up of the 7th Pay Commission. Justice AK Mathur was chosen to head the commission.
On June 29, 2016, the Narendra Moda government accepted the recommendations of the commission to hike the salary of its employees by 14 per cent.
Further on November 9, 2017, the maximum limit for borrowing for the purpose of buying a house was raised to Rs 2.5 million from Rs 7.5 lakh earlier, for government employees. The rate of interest for the borrowed amount was set at 8.5 per cent.
For armed forces, the 7th Pay Commission had recommended separate pay matrices and allowance systems for armed forces and civil defence forces.
