Union Cabinet approves Seventh Pay Commission recommendations on allowances

In a major relief to nearly 47 lakh central government employees, the Cabinet on Wednesday approved the recommendations on HRA and other allowances effective July 1, 2017.  The Cabinet approved 36 modifications to the 196 suggestions put up by the Finance Secretary Ashok Lavasa-led committee in April.

The Cabinet met Wednesday evening and shortly after the meeting ended Finance Minister Arun Jaitley said the combined additional financial impact of the revised allowances under the Seventh Pay Commission (7CPC) will be around Rs 30,748 crore a year.

The modification, which is based on the recommendations of Committee on Allowances, will result in an additional burden of Rs 1,448 crore over and above suggestions made by 7th Central Pay Commission.

After the meeting, the cabinet committee has suggested the following:

House Rent Allowance will be at 27% of the basic pay, 18% and 8%. The employees’ union had demanded the HRA at 30%,20%, and 10%.

Last year, the government had accepted the recommendations of Justice AK Mathur-headed Seventh Pay Commission in basic pay and hike. For allowances, the government had constituted a committee under Finance Secretary Ashok Lavasa to review the recommendations.

Following this, the government employees protested that the pay revision was not adequate. The panel submitted its report to the Department of Expenditure, which conducted the first round of review, following which it was presented before the Empowered Committee of Secretaries.

The government said that the central government employees will get allowances as per the old structure. The HRA in cities more than 5 million people, the HRA will be 27% of the basic pay.

A panel proposed bringing down the HRA to 24%, 16% and 8% of the basic pay, as per the cost of living in different cities.

The Seventh Pay Commission recommendations left government employees unsatisfied with a lowest basic pay hike of 14.27 percent in 7 decades.

After protests against the 7 CPC report intensified, the Modi government constituted a committee under Finance Secretary Ashok Lavasa in July last year to review the recommendations on allowances. The panel submitted the report on April 27.

Although the E-CoS had suggested a 2-6 percent increase in the HRA, depending on the type of cities, it is expected that the Cabinet will stick to the recommendations of the pay commission headed by A.K Mathur, which had proposed HRA at 24 per cent, 16 per cent and 8 percent of basic pay, leaving the central government employees unsatisfied. The demands then rose to 30%, 24% and 16% from the ones mentioned above.