Jun 16, 2017

Business Today - 7th Pay Commission: Government could increase the HRA for central government employees


The allowances recommendations, including on the most anticipated HRA, related to the 7th Pay Commission could be discussed in the cabinet meeting next week, according to reports. Shiv Gopal Mishra, the convenor of National Joint Council of Action (NJCA) has said that the government could increase the HRA to more than what the 7th pay commission has recommended, NDTV reported. NJCA represents central government employees. The Union Cabinet did not discuss the 7th Pay Commission issue when it met on 14th June. The Cabinet, which typically meets on Wednesdays, can discuss the issue next week. The HRA and other allowance matters could finally be discussed in this meeting as Finance Minister Arun Jaitley would be back from his ongoing visit to South Korea.

There have been numerous delays in the resolution to the allowances issue which have added to the frustration of central government employees. The matter has been pending for almost a year. After the central government employees opposed the recommendations on allowances made by the 7th pay commission, the government formed a committee led by Finance Secretary Ashok Lavasa, to look into the recommendations. The Ashok Lavasa Committee was supposed to submit its report in February, but there were delays. The committee finally submitted its report to Finance Minister Arun Jaitley on April 27. After which, an Empowered Committee of Secretaries was set up to consolidate the report. The consolidated report now has to be presented to the Cabinet.


According to the Finance Ministry, the Lavasa committee had made some modifications to 7th Pay Commission recommendations on allowances. There has been no word on the changes recommended by the Committee though. The only definite information is that the Empowered Committee of Secretaries screening the Lavasa Committee recommendations has capped HRA rates between 25 per cent and 27 per cent.

The Seventh Pay Commission recommended slashing the House Rent Allowance (HRA) -- for metros, commission recommended bringing down the HRA from 30 per cent to 24 per cent. It had suggested the rate of House Rent Allowance (HRA) be kept at 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively.The Seventh Pay Commission had recommended abolishing 53 of the 196 allowances, and subsuming 36 other allowances.

Government employees protested the recommendations of the Seventh Pay Commission, following which the Narendra Modi-government formed a committee under the Finance Secretary to review the suggestions.

The Committee on Allowances was constituted in July and after an extended deadline was asked to submit its report to the government by February 22, 2017. However, it submitted its review report on April 24.

The report was then taken up by the E-CoS for consideration and consolidation, after passing through Department of Expenditure, so that it can be presented before the Cabinet.