According to the report, the total number of grades will be reduced to 20 from the existing 35, the date of annual increment in all cases will be July 1 and the existing rate of House Rent Allowance (HRA) will be retained for A1 cities. For A, B1 and B2 cities, the allowance will be 20 per cent higher. C and unclassified cities will be given the allowance at the higher rate of 10 per cent. The City Compensatory Allowance (CCA) will be subsumed in transport allowance and the rate increased fourfold.
The implementaton of the 6th Pay Commission will come into effect from January 1, 2006, and will cost the exchequer Rs 12,561 crores in 2008-09. The net financial implication is estimated to be Rs 7975 crores for 2008-09 and an additional one-time burden of Rs 18,060 crores on payment of arrears.
The base year for the Consumer Price Index (CPI) for computation of Dearness Allowance (DA) will be revised as frequently as feasible. there will be formulation of a separate CPI for Government employees by the National Statistical Commission for computation of DA. Defence Forces will be given running pay bands and grade pay on par with those recommended for civilians. The Director General (Armed Force Medical Services) has been placed in the apex grade of Rs 80,000 (fixed).
In Defence Forces, only two trade group to be retained for personnel below Officer Ranks with the earlier trade groups Y and Z being merged. The personnel in trade group X will have an additional X group pay of Rs 1,400 per month.
Exixting rate of most of the allowances will be doubled, both in case of Defence Forces and civilian employees.
To remove stagnation, running pay bands for all posts to the Government presently existing in scales below that of Rs 26,000 (fixed) have been introduced. The reimbursement of education allowance will be raised from the existing level of Rs 50 to Rs 1000 per child per month, subject to the maximum of two children. The hostel subsidy will be raised from the existing Rs 300 per month to Rs 3000 per month.
The risk allowance will be replaced by risk insurance.
Pension will be paid at 50 per cent of the average emoluments/last pay drawn (which ever is more beneficial) without linking it to 33 years of qualifying services for grant of full pension.
The report further says that in case of government employees dying in harness, family pension will be paid at enhanced rates for a period of 10 years.
A new medical insurance scheme has been recommended for Government employees, and will be optional for existing Central Government employees and pensioners. New Government employees and new pensioners will be compulsorily covered by the scheme.
The fitment formula recommended for serving employees will be extended in case of existing pensioners family pensioners.
The rates of Constant Attendent Allowance for disabled pensioners will be increased by five times to Rs 3000 per month.
Government offices will only remain closed only on the three national holidays. All other gazetted holidays will be abolished and compensated by increasing the number of restricted holidays from two to eight days in a year.
On the revised pay bands being recommended, a separate pay band, designated as -1S scale, is not to be counted for any purpose as no future recruitment is to be made in this grade. All the present Group D employees not possessing the prescribed qualifications are to be upgraded and placed in the Group C running pay band PB-1.
The PB-1 minimum pay band to be Rs 6660 (Rs 4,860 as pay in the pay band plus Rs 1800 as grade pay).
The PB-2 minimum pay band to be Rs 12,000 (Rs 8,700 as pay in the pay band plus Rs 4,200 as grade pay).
The PB-3 minimum pay band to be Rs 21,000 (Rs 15,600 as pay in the pay band plus Rs 5,400 as grade pay).
The PB-4 minimum pay band to be Rs 48,200 (Rs 39,200 as pay in the pay band plus Rs 9,000 as grade pay).
In a move to increase efficiency, the report also proposes the introduction of Performance Related Incentive Scheme (PRIS) in the Government sector, under which employees will be eligible for pecuniary remunerations over and above the pay. PRIS would replace ad-hoc bonus scheme immediately and eventually replace Productivity Linked Bonus.
The report adds that systems be put in place for giving market driven compensation package to young scientists and posts requiring special expertise and professional skills.
The Report proposes that all the recommendations be treated as an organic whole as partial implementation will bring in several anomalies and inconsistencies.