COMPARISON OF 6TH AND 7TH CPC TERMS OF REFERENCE

B. To transform the Central Government Organisations into modern, professional and citizen-friendly entities that are dedicated to the service of the people.

C. To work out a comprehensive pay package for the categories of Central Government employees mentioned at (A) above that is suitably linked to promoting efficiency, productivity and economy through rationalization of structures, organizations, systems and processes within the government, with a view leveraging economy, accountability, responsibility, transparency, assimilation of technology and discipline.

D. To harmonize the functioning of the Central Government Organisations with the demands of the emerging global economic scenario. This would also take in account, among other relevant factors, the totality of benefits available to the employees, need of rationalization and simplification, thereof, the prevailing pay structure and retirement benefits available under the Central Public Sector Undertakings, the economic conditions in the country, the need to observe fiscal prudence in the management of the economy, the resources of the Central Government and the demands thereon on account of economic and social development, defence, national security and the global economic scenario, and the impact upon the finances of the States if the recommendations are adopted by the States.

E. To examine the principles which should govern the structure of pension, death-cum-retirement gratuity, family pension and other terminal or recurring benefits having financial implications to the present and former Central Government employees appointed before January 1, 2004.

F. To make recommendations with respect to the general principles, financial parameters and conditions which should govern payment of bonus and the desirability and feasibility of introducing Productivity Linked Incentive Scheme in place of the existing ad hoc bonus scheme in various Departments and to recommend specific formulae for determining the productivity index and other related parameters.

G. To examine desirability and the need to sanction any interim relief till the time the recommendations of the Commission are made and accepted by the Government. *A. vi substituted by Ministry of Finance Resolution No.5/2/20006-E.III (A) dated the 7th December, 2006. **A. vii substituted by Ministry of Finance Resolution No.5/2/2006-E.III (A) dated the 8th August, 2007.

The Commission will devise its own procedure and may appoint such Advisers, institutional consultants and experts, as it may consider necessary for any particular purpose. It may call for such information and take such evidence, as it may consider necessary. Ministries and Departments of the Government of India will furnish such information and documents and other assistance as may be required by the Commission.

The Government of India trusts that State Governments, Service Association and others concerned will extend to the Commission their fullest cooperation and assistance. The Commission will have its headquarters in Delhi.

The Commission will make its recommendations within 18 months of the date of its constitution. It may consider, if necessary, sending reports on any of the matters as and when the recommendations are finalized.

The Union Cabinet today gave its approval to the Terms of Reference of 7th Central Pay Commission (CPC) as follows:-
a) To examine, review, evolve and recommend changes that are desirable and feasible regarding the principles that should govern the emoluments structure including pay, allowances and other facilities/benefits, in cash or kind, having regard to rationalization and simplification therein as well as the specialized needs of various Departments, agencies and services, in respect of the following categories of employees:-
i. Central Government employees-industrial and non-industrial;
ii. Personnel belonging to the All India Services;
iii. Personnel of the Union Territories;
iv. Officers and employees of the Indian Audit and Accounts Department;
v. Members of regulatory bodies (excluding the Reserve Bank of India) set up under Acts of Parliament; and
vi. Officers and employees of the Supreme Court.

b) To examine, review, evolve and recommend changes that are desirable and feasible regarding principles that should govern the emoluments structure, concessions and facilities/benefits, in cash or kind, as well as retirement benefits of personnel belonging to the Defence Forces, having regard to historical and traditional parities, with due emphasis on aspects unique to these personnel.

c) To work out the framework for an emoluments structure linked with the need to attract the most suitable talent to Government service, promote efficiency, accountability and responsibility in the work culture, and foster excellence in the public governance system to respond to complex challenges of modern administration and rapid political, social, economic and technological changes, with due regard to expectations of stakeholders, and to recommend appropriate training and capacity building through a competency based framework.

d) To examine the existing schemes ofpayment of bonus, keeping in view, among other things, its bearing upon performance and productivity and make recommendations on the general principles, financial parameters and conditions for an appropriate incentive scheme to reward excellence in productivity, performance and integrity.

e) To review the variety of existing allowances presently available to employees in addition to pay and suggest their rationalization and simplification, with a view to ensuring that the pay structure is so designed as to take these into account.

f) To examine the principles which should govern the structure of pension and other retirement benefits, including revision of pension in the case of employees who have retired prior to the date of effect of these recommendations, keeping in view that retirement benefits of all Central Government employees appointed on and after 01.01.2004 are covered by the New Pension Scheme (NPS).

g) To make recommendations on the above, keeping in view:
i. the economic conditions in the country and need for fiscal prudence;
ii. the need to ensure that adequate resources are available for developmental expenditures and welfare measures;
iii. the likely impact of the recommendations on the finances of the State Governments, which usually adopt the recommendations with some modifications;
iv. the prevailing emolument structure and retirement benefits available to employees of Central Public Sector Undertakings; and
v. the best global practices and their adaptability and relevance in Indian conditions.

h) To recommend the date of effect of its recommendations on all the above.The Commission will make its recommendations within 18 months of the date of its constitution.

It may consider, if necessary, sending interim reports on any of the matters as and when the recommendations are finalised. 

The decision will result in the benefit of improved pay and allowances as well as rationalization of the pay structure in case of Central Government employees and other employees included in the scope of the 7th Central Pay Commission.

Background
Central Pay Commissions are periodically constituted to go into various issues of emoluments’ structure, retirement benefits and other service conditions of Central Government employees and to make recommendations on the changes required.