5th Central Pay Commission

The 5th Central Pay Commission was the pay review body constituted by Government of India Resolution No. 5(12)/E.III/93 dated 9 April 1994 under the chairmanship of Justice S. Ratnavel Pandian, whose recommendations revised central government pay from 1 January 1996 into 34 scales running from Rs. 2,550 to Rs. 30,000 a month, added 40% of pre-revised basic pay as fitment, and fixed 100% neutralisation of dearness allowance at every level. The Government accepted the recommendations by Resolution No. 50(1)/IC/97 dated 30 September 1997 and notified them through the Central Civil Services (Revised Pay) Rules, 1997 of the same date.

It was the last commission to run central pay on a ladder of separate scales. The 6th Central Pay Commission replaced that model in 2006 with four running pay bands and grade pay, and the 7th Central Pay Commission folded both into the single 18-level pay matrix in 2016. The S-1 to S-34 numbering survives all the same, because every concordance table used to revise an old pension still runs through it.

Two things about the 5th CPC pulled in opposite directions. It granted a large rise, made full inflation protection universal, and lifted every pension ceiling it touched. It also recommended cutting the government workforce by about 30% over ten years to pay for that, and the cut never happened. The award cost the Centre roughly Rs. 17,000 crore a year on a recurring basis, arrived with 21 months of arrears, and left state finances under strain once the states copied it.

This article sets out the Commission’s constitution and terms of reference, the report and the six scales the Government improved on its own initiative, the full S-1 to S-34 scale table, the 40% fitment and the arrears rules, the dearness allowance decision and the 483% rate still paid on those scales today, the revised allowances, the pension and gratuity changes, the interim relief that preceded the report, the unimplemented staff cuts and the fiscal consequences, and the transition into the 6th CPC structure.

Constitution and terms of reference

The 5th Central Pay Commission was constituted by Government of India Resolution No. 5(12)/E.III/93 dated 9 April 1994, and became operational on 2 May 1994. That founding Resolution was amended four times while the Commission sat, by Resolutions of the same number dated 12 January 1995, 17 July 1996, 24 October 1996 and 19 November 1996, each recorded in the preamble to the acceptance Resolution No. 50(1)/IC/97.

Justice S. Ratnavel Pandian, a retired judge of the Supreme Court of India, chaired it. The other two members were Prof. Suresh D. Tendulkar, the economist then at the Delhi School of Economics, and M. K. Kaw of the Indian Administrative Service, who served as Member Secretary. A retired Supreme Court judge in the chair was already the convention by 1994, and it held for the 6th and 7th Commissions and for the 8th Central Pay Commission after them.

The terms of reference covered the structure of emoluments, allowances, conditions of service and retirement benefits of central government employees, including employees of the Union Territories, members of the All India Services and personnel of the armed forces. The Commission was also asked to weigh administrative reform, the size of the workforce and the Government’s capacity to pay, which is the clause the downsizing recommendation hangs on.

No member of the armed forces sat on the three-member body. The defence services raised that as a grievance afterwards, and it is one reason later commissions took evidence from service headquarters more formally.

Report and the Government’s acceptance

The Commission submitted its main report on 30 January 1997 and two supplementary reports on 28 February 1997, Supplementary Report No. 1 on Improving the Motivation Level and Supplementary Report No. 2 on the Cabinet Secretariat. The main report ran to nine parts and 172 chapters.

The Government accepted the recommendations for civilian employees in Groups A, B, C and D and for the All India Services broadly, by Resolution No. 50(1)/IC/97 dated 30 September 1997, subject to modifications set out in the Resolution itself. The CCS (Revised Pay) Rules, 1997 were issued on the same date, the 5th CPC predecessor of the rules that carried the 7th CPC scales into force in 2016.

Four modifications in that Resolution matter, and three of them made employees better off than the Commission had proposed.

Six recommended scales were improved outright. Scales S-1 to S-5 and S-13 were raised above what the Commission had recommended, so S-1 became Rs. 2,550-55-2660-60-3200 instead of the recommended Rs. 2,440-40-3200, and S-13 became Rs. 7,450-225-11500 instead of Rs. 7,000-225-11500. The commonly quoted 5th CPC minimum of Rs. 2,550 is therefore the Government’s figure, not the Commission’s.

The fitment percentage was doubled, from the 20% of pre-revised basic pay the Commission recommended to 40%. That single decision is the largest departure from the report in the whole Resolution.

Scale S-14 was made inoperative for the Central Secretariat Service and for any other service whose cadre controlling authority did not consider it necessary. The scales of Motormen and Engine Drivers, Diesel Assistants in the Ministry of Railways, Engineering Assistants in the Ministry of Information and Broadcasting, Senior Auditors and Accountants, Junior Telecom Officers, and the entry level in DANICS and DANIPS were referred to a Committee of Secretaries under the Fast Track Mechanism, with normal replacement scales applying until it reported.

Pay scales S-1 to S-34

The 5th CPC replaced 51 pre-revised 4th Central Pay Commission scales with 34, numbered S-1 to S-34, each with its own minimum, increment pattern and maximum. The Annexure to Resolution No. 50(1)/IC/97 sets out the mapping, and the count of 51 is verifiable from it: several 5th CPC grades absorbed two or three older scales, which is where the compression came from.

The table below gives the principal pre-revised scale replaced by each grade and the revised scale as notified, that is, after the Government’s improvement of S-1 to S-5 and S-13. All figures are rupees a month.

Source: Annexure, Part A, item 1(I) of Resolution No. 50(1)/IC/97 dated 30 September 1997, read with the modifications in the Resolution.

Three of the 34 scales carry no increment at all. S-16 at Rs. 9,000, S-33 at Rs. 26,000 and S-34 at Rs. 30,000 were fixed figures, and S-34 was the Cabinet Secretary’s pay. Scale S-14 at Rs. 7,500-250-12000 was built on a pre-revised scale of Rs. 2,500-4,000 that did not previously exist, which the Commission proposed and the Government then made optional for cadres that did not want it.

Minimum pay, maximum pay and the compression that did not happen

The notified 5th CPC structure ran from Rs. 2,550 a month at the start of S-1 to Rs. 30,000 fixed at S-34, a ratio of about 1:11.8. The 4th Central Pay Commission structure it replaced ran from Rs. 750 to Rs. 9,000 fixed, a ratio of 1:12. The vertical span therefore barely moved.

That matters because pay commissions are usually read as compressing the hierarchy, and this one did not. What it did instead was raise every rung, roughly 3.4 times at the bottom and 3.3 times at the top. The Commission’s own recommended minimum pay of Rs. 2,440 was derived from a needs-based calculation of Rs. 2,434.75, rounded up; the Government’s improvement to Rs. 2,550 raised it a further 4.5%.

For comparison down the sequence, the 6th CPC set minimum pay at Rs. 7,000 and the apex at Rs. 90,000 from 1 January 2006, and the 7th CPC set Rs. 18,000 and Rs. 2,50,000 from 1 January 2016.

Pay fixation: the 40% fitment and the bunching rule

Pay was fixed in the revised scales by adding 40% of pre-revised basic pay to the existing emoluments, under item (II) of Resolution No. 50(1)/IC/97 dated 30 September 1997. The Fifth Central Pay Commission had recommended 20%. The Government doubled it, and that decision is the reason the 5th CPC rise is remembered as large.

The fitment operated on a base that already carried the dearness allowance then in payment and the two instalments of interim relief, all of which were merged into the pre-revised basic before the 40% was applied. This is the 5th CPC analogue of the 1.86 multiple used in 2006 and the 2.57 fitment factor used in 2016, though it was expressed as an addition rather than a multiplier.

The Resolution also settled the bunching problem, which arises whenever several pre-revised stages map to one revised stage and long-serving employees lose the value of increments already earned. Fixation had to be made so that every employee got at least one increment in the revised scale for every three increments earned in the pre-revised scale. The Commission’s separate recommendation of one increment for bunching at the fifth stage was accepted alongside it.

Effective dates, arrears and the instalment rule

Revised pay and revised dearness allowance took effect from 1 January 1996, but every other allowance was revised only from 1 August 1997. The split is in paragraphs 4 and 5 of Resolution No. 50(1)/IC/97, and it is the single most common error in accounts of the 5th CPC: house rent allowance, city compensatory allowance and transport allowance at the revised rates carry no arrears for 1996 and 1997 at all.

Because the CCS (Revised Pay) Rules, 1997 were notified on 30 September 1997 against an effective date of 1 January 1996, pay arrears covered 21 months. The Government modified the Commission’s recommendation on how they were to be paid: arrears were paid in cash, in one instalment where the amount was below Rs. 5,000, and in two instalments where it exceeded that, with the first instalment restricted to Rs. 5,000 plus half the balance.

The instalment of dearness allowance sanctioned from 1 July 1996 was adjusted against the dearness allowance payable under the revised formula, so employees did not draw both.

Dearness allowance: 100% neutralisation for everyone

The 5th CPC made inflation neutralisation uniform at 100% at all levels, recommended at Chapter 105, paragraph 105.9 of the report and accepted without modification. Before it, neutralisation tapered with seniority, giving full protection at the bottom of the structure and progressively less higher up. That principle of full protection for every employee has governed dearness allowance ever since, through the 6th and 7th CPC regimes, and it is the most durable thing the Commission did.

Two mechanical decisions went with it. The All-India Consumer Price Index for Industrial Workers remained the index, but the computation moved onto the series with base 1982 equal to 100, replacing the 1960 base. The existing practice of using a 12-monthly average of the index continued. Revised pay and dearness allowance were both given effect from 1 January 1996 at a 12-monthly AICPI average of 1510 on the old 1960 base, which is the level the whole 5th CPC structure is anchored to.

One dearness allowance recommendation was rejected. The Commission had proposed that dearness allowance, including dearness pay, be paid net of taxes. The Government did not accept it.

The 5th CPC dearness allowance rate today

Dearness allowance on the 5th CPC scales is 483% of basic pay with effect from 1 January 2026, raised from 474% by Department of Expenditure Office Memorandum No. 1/1(iii)/2026-E.II(B) dated 22 April 2026. The series is still live because a small number of Central Government employees and employees of Central Autonomous Bodies continue to draw pay in the pre-revised 5th CPC scales, and paragraphs 3, 4 and 5 of Office Memorandum No. 1(13)/97-E.II(B) dated 3 October 1997 still regulate how it is paid to them. Dearness relief for pensioners on the corresponding scales follows through a parallel Department of Pension and Pensioners’ Welfare order.

The three series run side by side and are not interchangeable, because each is anchored to a different base index and a different basic pay.

A 483% figure looks startling next to 60% only because the two are percentages of different things. The 5th CPC counter has never been reset, since resetting it is what a pay revision does, and an employee who never moved onto the 6th or 7th CPC structure has carried the same Rs. 2,550-to-Rs. 30,000 basic pay for thirty years while the index climbed.

Allowances: house rent, city compensatory and transport

The 5th CPC classified cities into six categories on population alone and paid house rent allowance at four rates across them. Places of 50 lakh and above were A-1, 20 to 50 lakh were A, 10 to 20 lakh were B-1, 5 to 10 lakh were B-2, 50,000 to 5 lakh were C, and anything below 50,000 was unclassified. The rates were 30% for A-1, 15% for A, B-1 and B-2 alike, 7.5% for C and 5% for unclassified towns. The Commission had proposed calculating them on the maximum of the pay scale; the Government modified that so the allowance was linked to actual pay drawn, which is the basis still used. The existing power to classify a particular city by special order, outside the population test, was retained.

That six-way city classification for HRA is the direct ancestor of the present three-way one. The 6th CPC collapsed A-1, A, B-1, B-2, C and unclassified into X, Y and Z at 30%, 20% and 10%, and the 7th CPC reset those to 24%, 16% and 8% before dearness allowance escalation carried them back up.

City compensatory allowance was paid at fixed monthly rates rather than as a percentage, on a grid of four pre-revised pay ranges against the four highest city classes. An employee on pre-revised basic pay of Rs. 750 to Rs. 1,000 drew Rs. 90 in an A-1 city, Rs. 65 in A, Rs. 45 in B-1 and Rs. 25 in B-2. At the top range of Rs. 2,001 and above the same four figures were Rs. 300, Rs. 240, Rs. 180 and Rs. 120.

Transport allowance entered the central pay structure on the 5th CPC’s recommendation, at Rs. 800, Rs. 400 and Rs. 100 a month for executives, supervisors and supporting or auxiliary staff in A-1 and A cities, and at lower rates elsewhere. The Government added the exclusions that still apply in substance today: no allowance for an employee provided with government accommodation within one kilometre of the place of duty or inside a campus housing both, and none for an employee provided with government transport.

Non-practising allowance for doctors was moved off its slab system onto a uniform 25% of basic pay, subject to pay plus non-practising allowance not exceeding Rs. 29,500. The Commission’s proposal to give officers of Deputy Secretary rank and above a residential telephone attendant at government cost of Rs. 1,500 a month was not accepted.

Pension, gratuity, commutation and family pension

The 5th CPC lifted almost every pension ceiling it examined, and the orders are in Department of Pension and Pensioners’ Welfare Office Memorandum No. 45/86/97-P&PW(A)-Part I dated 27 October 1997, issued in pursuance of that Department’s Resolution No. 45/86/97-P&PW(A) dated 30 September 1997.

Pension itself stayed at 50% of average emoluments, under paragraph 5 of that Office Memorandum, but acquired a floor of Rs. 1,275 a month and a ceiling of 50% of the highest pay in Government, which at Rs. 30,000 meant Rs. 15,000. The Commission had recommended removing the ceiling altogether and the Government accepted that only in part. Rule 49(2) of the CCS (Pension) Rules, 1972 was modified accordingly.

Dearness allowance on the date of retirement became part of emoluments for gratuity, under paragraph 4.3, and the retirement gratuity ceiling rose from Rs. 2.5 lakh to Rs. 3.5 lakh. The gratuity ceiling has been revised three times since, to Rs. 10 lakh by the 6th CPC and to Rs. 20 lakh and then Rs. 25 lakh under the 7th.

Commutation of pension rose from one-third to 40% of pension, under paragraph 8, which modified Rules 5(1) and 5(2) of the CCS (Commutation of Pension) Rules, 1981. That 40% limit is unchanged today. The Commission’s parallel proposal to restore the commuted portion after 12 years instead of 15 was rejected, and restoration still takes 15 years.

Family pension was unified at 30% of pay for every category under paragraph 7.1, replacing a slab system that had paid 30%, 20% and 15% at different pay levels, with a floor of Rs. 1,275 a month against the earlier Rs. 1,250 and a ceiling of 30% of the highest pay in Government, or Rs. 9,000. The table under Rule 54(2) of the CCS (Pension) Rules, 1972 ceased to operate. Paragraph 7.2 widened the definition of family to include wholly dependent parents where the deceased left neither widow nor child, and a son or daughter, including a widowed or divorced daughter, until the age of 25 or until marriage or remarriage. Enhanced-rate family pension for seven years or until the age of 67 was accepted separately, by Office Memorandum No. 45/8/97-P&PW(E) dated 2 February 1999.

Pre-1996 pensioners were dealt with by Office Memorandum No. 45/86/97-P&PW(A)-Part II of the same date, which consolidated the existing pension, dearness relief, interim relief and a fitment weightage into a revised pension from 1 January 1996. Here too the Commission proposed 20% of basic pension as the weightage and the Government substituted 40%, the same doubling it applied on the pay side. Pre-1986 pensioners were covered by Part III dated 10 February 1998 through notional fixation of pay as on 1 January 1986, and Office Memorandum No. 45/10/98-P&PW(A) dated 17 December 1998 stepped consolidated pension up to 50%, and family pension to 30%, of the minimum of the revised scale corresponding to the post held at retirement. That stepping-up rule is the ancestor of every later revision of pension exercise.

Two further 5th CPC decisions still show on pensioner payslips. Fixed medical allowance of Rs. 100 a month for pensioners living outside a CGHS area was created by Office Memorandum No. 45/57/97-P&PW(C) dated 19 December 1997. Ex-gratia of Rs. 600 a month was sanctioned for Contributory Provident Fund retirees who had superannuated between 18 November 1960 and 31 December 1985.

Interim relief before the report

Interim relief was paid in three instalments while the 5th CPC sat, more than before any other commission. A flat Rs. 100 a month ran from 16 September 1993, directed to be treated as neither pay nor allowance nor wage. A second instalment from 1 April 1995 gave 10% of basic pay subject to a minimum of Rs. 100 a month, and a third from 1 April 1996 gave a further 10% on the same minimum. Pensioners received parallel instalments.

All three were absorbed into the revised pay when the 5th CPC scales took effect from 1 January 1996, which is why they appear inside the fitment base rather than as a separate line. No interim relief has been granted before any commission since: not before the 6th, whose terms of reference expressly asked it to examine the question, not before the 7th, and none has been announced before the 8th.

The staff cuts that were not implemented

The 5th CPC tied its pay rises to downsizing, and the downsizing did not follow. It recommended a reduction of about 30% in staff strength over ten years and a freeze on recruitment against roughly 3,50,000 vacant posts, on the reasoning that a smaller, better-paid service was the trade the exchequer should make for a 40% fitment.

The Government implemented the pay and allowance rises and did not implement the staff reductions. The result was the higher wage bill without the offsetting savings, and it is the standing criticism of the exercise: a pay award granted without the reform meant to fund it. The 6th and 7th Commissions were both drafted against that memory, and neither made its pay recommendations conditional on a headcount cut.

Cost, and the effect on central and state finances

The award added about Rs. 17,000 crore a year to central expenditure on a recurring basis, and it landed with 21 months of arrears concentrated in 1997-98. Central finances were under visible strain in the two years that followed.

The larger effect ran through the states. State governments have no obligation to follow a Central Pay Commission, but most of them appoint their own pay committees on the central pattern soon after a central award, and they did so after 1997. Wage bills rose sharply enough that several states, Punjab among them, were left spending effectively their whole revenue on salaries, pensions and debt service, which is the background to the debt swap scheme the Centre offered at the turn of the century. The fiscal argument for restraint in the 6th and 7th CPC awards traces directly to this episode.

Dearness pay and the 2004 merger

Paragraph 105.11 of the report recommended converting dearness allowance into dearness pay each time the consumer price index rose 50% over the base index used by the last pay commission, so that inflation-driven allowance would periodically become pay and count for everything pay counts for. The Government acted on it from 1 April 2004, when 50% of pay’s worth of dearness allowance was merged as dearness pay under Department of Expenditure Office Memorandum F. No. 105/1/2004-IC dated 1 March 2004. Paragraph 2 of that order counted it for allowances, transfer grant, retirement benefits, contribution to the General Provident Fund, licence fee, the monthly CGHS contribution and advances, and excluded leave travel concession, travelling allowance on tour and on transfer, and entitlement to government accommodation.

Dearness pay lasted less than two years as a distinct element. The 6th CPC built its revised structure on a base that already absorbed it, so from 1 January 2006 it disappeared from the payslip.

No such provision exists today. Neither the 6th nor the 7th CPC carried the automatic merger forward, and dearness allowance crossing 50% on 1 January 2024 produced no merger into basic pay. What it did produce was the pre-authorised escalation of house rent allowance to 30%, 20% and 10%, which is a different mechanism with a different legal basis.

Transition to the 6th CPC structure

Conversion out of the 5th CPC scales was done by multiplying pre-revised basic pay by 1.86 and adding the grade pay of the post, giving pay in the band plus grade pay from 1 January 2006. Grade pay was itself set broadly in proportion to the 5th CPC scale it replaced, which is why the S-1 to S-34 numbering did not disappear in 2006: it is embedded in the grade pay values, and it still appears in the concordance tables used to revise the pension of anyone who retired on those scales.

The 5th CPC therefore sits between the 4th, effective from 1 January 1986 with a minimum of Rs. 750, and the 6th, effective from 1 January 2006 with a minimum of Rs. 7,000. It is the last of the old-style commissions, the one that kept 34 separate ladders where the 6th put four bands and the 7th put one matrix of 18 levels. The 8th Central Pay Commission, constituted on 3 November 2025, has not yet reported.

Of everything the 5th CPC recommended, the piece that still governs pay for every central government employee is the smallest-looking one: 100% neutralisation of dearness allowance at every level, uniform, without tapering, from Chapter 105 of a report submitted on 30 January 1997.

Related Articles

• Central Pay Commission
• 4th Central Pay Commission
• 6th Central Pay Commission
• 7th Central Pay Commission
• 8th Central Pay Commission
• 7th vs 8th Pay Commission
• Pay band
• Grade pay
• Pay matrix
• Fitment factor
• Index of rationalisation
• Minimum pay
• Cabinet Secretary pay
• CCS (Revised Pay) Rules, 2016
• Dearness allowance
• Dearness relief
• Dearness pay
• Interim relief
• AICPI-IW
• House rent allowance
• City classification for HRA
• City compensatory allowance
• Transport allowance
• Non-practising allowance
• Central government pension
• Revision of pension
• Commutation of pension
• Restoration of commuted pension
• Gratuity for central government employees
• Family pension
• Fixed medical allowance
• Concordance table
• Central government employees in India
• All India Services
• Department of Expenditure

External references

• Department of Expenditure, pay related matters (CCS (Revised Pay) Rules, 1997)
• Department of Expenditure, revision of dearness allowance on 5th CPC pay scales
• Pensioners’ Portal, salient recommendations of the Vth CPC on retirement benefits
• Department of Pension and Pensioners’ Welfare, circulars archive
• Department of Personnel and Training
• Press Information Bureau

References

1. Government of India Resolution No. 5(12)/E.III/93 dated 9 April 1994, constituting the Fifth Central Pay Commission, as amended on 12 January 1995, 17 July 1996, 24 October 1996 and 19 November 1996.
2. Report of the Fifth Central Pay Commission, submitted 30 January 1997, with Supplementary Report No. 1 on Improving the Motivation Level and Supplementary Report No. 2 on the Cabinet Secretariat, both submitted 28 February 1997.
3. Ministry of Finance, Department of Expenditure Resolution No. 50(1)/IC/97 dated 30 September 1997, accepting the recommendations: item (I) on the improved scales S-1 to S-5 and S-13, item (II) on the 40% fitment, paragraphs 4 and 5 on the effective dates, paragraph 6 on payment of arrears, and the Annexure, Part A, item 1(I) for the S-1 to S-34 scale table and items 2(i) to 2(iii) for dearness allowance.
4. Central Civil Services (Revised Pay) Rules, 1997, No. 50(1)/IC/97, dated 30 September 1997.
5. Department of Pension and Pensioners’ Welfare Office Memorandum No. 45/86/97-P&PW(A)-Part I dated 27 October 1997: paragraph 4.3 (dearness allowance as emoluments for gratuity), paragraph 5 (pension, floor of Rs. 1,275, ceiling of 50% of the highest pay), paragraphs 7.1 and 7.2 (family pension at 30% and the widened definition of family), and paragraph 8 (commutation up to 40%).
6. Department of Pension and Pensioners’ Welfare Office Memorandum No. 45/86/97-P&PW(A)-Part II dated 27 October 1997 (consolidation of pre-1996 pension with a 40% fitment weightage), Part III dated 10 February 1998, Part IV dated 8 May 1998, and Office Memorandum No. 45/10/98-P&PW(A) dated 17 December 1998.
7. Department of Pension and Pensioners’ Welfare Office Memorandum No. 45/57/97-P&PW(C) dated 19 December 1997, introducing fixed medical allowance of Rs. 100 a month.
8. Ministry of Finance, Department of Expenditure Office Memorandum No. 1/1(iii)/2026-E.II(B) dated 22 April 2026, raising dearness allowance on 5th CPC pay scales to 483% from 1 January 2026, read with Office Memorandum No. 1(13)/97-E.II(B) dated 3 October 1997.
9. Report of the Sixth Central Pay Commission, submitted 24 March 2008, for the conversion of 5th CPC scales into pay bands and grade pay at a multiple of 1.86.