A.       To examine the principles, the date of effect thereof that should govern the structure of pay, allowances and other facilities/benefits whether in cash or in kind to the following categories of employees:-

1.                              Central government employees – industrial and non-industrial.

2.                              Personnel belonging to the All India Services.

3.                              Personnel belonging to the Armed Forces.

4.                              Personnel to the Union Territories.

5.                              Officers and employees of the Indian Audit and Accounts Department; and

6.                              Members of the regulatory bodies (excluding the RBI) set up under Acts of Parliament.

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.