7th Pay Commission ‘Pay in the Pay Band’ – How the multiplication factor was arrived at 2.8?
Why it was increased by 2.8 times?
The 6th Central Pay Commission, in its recommendations, introduced the concept of Multiplication Factor. The Multiplication Factor was fixed at 1.74 in the recommendations of 6th CPC. The Commission had also explained how the number was arrived at.
But the Central Government chose to change it to 1.86. One of the reasons for this modification was the intense pressure from various Federations of Central Government Employees.
First we should know about the fixation of 1.74
Basic Pay on 1.1.2006 = ‘1’
50% DA Merger = ‘0.5’
Dearness Allowance (24%) = ‘0.24’
Total = ‘1.74’ (1 + 0.5 + 0.24)
And what basis the Central Government changed as 1.86?
Let us assume the Basic Pay, as of 01.01.2006, as 100%. Let’s take the Dearness pay (post the 50% DA Merger) as 50%.
If you add Basic Pay and Dearness Pay and calculate 24% of it, then you’d get 36%. (100 + 50 = 150 / 24 x 100 = 36)
100% + 50% + 36% = 186%
This number is being taken for calculations as 1.86.
We have also adopted the same method here including the weightage of Dearness Allowance is providing on Transport Allowance…