Did you know how the 6th CPC’s Multiplication Factor of 1.86 was derived?

The 6th Pay Commission had recommended a Multiplication Factor of 1.74, 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. It has to be mentioned at this point that all the federations had presented demands to the Government to raise the minimum basic pay to Rs. 10,000.

Exactly how did the Government arrive at 1.86? Here is an explanation how –

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%. Let us also take into account the 24% Dearness Allowance that was given before 01.01.2006.

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.

At the time of 6th CPC Pay Fixation, the last drawn Basic Pay under 5th CPC was multiplied by 1.86 and rounded off. It was also explained that a new entity named Grade Pay was created and a sum total of this was the new Basic Pay.

Hence, it was impossible to consider 1.86 as the true yardstick. For example, for a basic pay of Rs. 3050…

3050 x 1.86 = 5680 (After rounded off)

Corresponding Grade Pay for 3050 is 1900,

Band Pay 5680 + Grade Pay 1900 = Basic Pay 7580

5th CPC basic pay = 3050

6th CPC basic pay = 7580

The multiplication factor number comes to 2.48.

It is not possible to take 2.48 as common for all basic pays. But, 2.48 was considered very low. That’s why we have used a bigger number to calculate in the 7th CPC’s Expected Pay Scale.

source-http://90paisa.blogspot.in/2014/04/did-you-know-how-6th-cpc-multiplication.html

G.Rajamanickam says

The above calculation to determine revised pay shown above does not appear to be in order. Though the existing basic pay was multiplied by 1.86, the grade pay granted was 40% of maximum of the pay scale. For example, if Mr Á’was drawing his pre-revised pay in the scale of Rs.4000-6000 in the grade of UDC, he was given the benefit of 40 % of 6000 i.e.Rs.24000 as grade pay irrespective of the pay drawn by him the scale of Rs.4000-6000. So determining the revised pay by multiplying the pre-revised pay into 2.48 as shown above is not correct.