The 7th Central Pay Commission has retained rate of annual increment at 3 percent. The 7th CPC has also recommended withholding of annual increments in the case of those employees who are not able to meet the benchmark either for MACP or a regular promotion within the first 20 years of their service. These recommendations have been accepted by the Government. 

The 7th CPC has observed that it is essential to have a linkage between Departmental Results Framework Documents (RFD) and Annual Appraisal Performance Report (APAR) and has suggested the following modification in the existing APAR system for determining Performance Related Pay:

(i)    Alignment of Objectives: The Ministry’s Vision/Mission needs to be translated into a set of strategic objectives for each department and these objectives need to be cascaded by the Department Head to his subordinates and subsequently down the chain.

(ii)   Prioritizing Objectives, Assigning Success Indicators and their Weights: Objectives reflected in the APAR should be prioritized and assigned weights along with success indictors or Key Performance Indicators. The Commission recommended 60 percent weight on work output and 40 percent weight on personal attributes, instead of existing 60 percent weight on personal attributes and only 40 percent weight to work output.

(iii)  No Ex-ante Agreement: The indicators in the APAR of an officer/staff will need to be discussed and set with the supervisor at the beginning of the year.

(iv)  Timelines: The timelines for RFD may be synchronized with the preparation of the APAR so that the targets set under RFD get reflected in individual APARs in a seamless manner.

(v)  Online APAR System: The Commission recommended introduction of online APARs system for all Central Government officers/employees. 

This was stated by Shri Arjun Ram Meghwal, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

Performance-linked appraisal overhaul: objectives cascaded, weights shifted toward work output, synchronized targets and online APAR mandated. The 7th Central Pay Commission retained the annual increment rate and recommended withholding increments for employees who do not meet MACP or promotion benchmarks within the first twenty years; the Government has accepted these recommendations. The Commission mandated linking Departmental Results Framework Documents with APARs, requiring strategic objectives to be cascaded, objectives to be prioritised with success indicators and weights emphasizing work output over personal attributes, APAR indicators to be set with supervisors at year-start, RFD-APAR timeline synchronization, and an online APAR system for all Central Government officers and employees.