Jun 28, 2017

7th Pay Commission: Modi Cabinet approves revision in HRA rates, other allowances

Narendra Modi-led Cabinet has okayed the recommendations of the Seventh Pay Commission on revised allowance structure for nearly 50 lakh Central government employees.

The Union Cabinet has approved the recommendations of the Seventh Pay Commission on House Rent Allowance (HRA) rates and other allowances for Central government employees.

Finance Minister Arun Jaitley said that the Seventh Pay Commission's recommendations have been cleared with 34 modifications.

With this, the Narendra Modi government is set to implement the revised allowance structure from July.

The implementation of revised allowance structure will cost the state exchequer an estimated Rs 30,78.23 crore.

The Seventh Pay Commission projected additional financial implication of Rs 29,300 crore per annum; the modifications by the Cabinet will cost another Rs 1448.23 crore.

Prime Minister Modi, who returned from his three-nation tour today morning, was expected to chair the month's last Cabinet meet and decide on allowances for nearly 50 lakh Central government employees.

The Seventh Pay Commission examined 197 allowances for Central government employees and recommended axing 53 of them and merging another 37 with bigger ones.

What the Cabinet decision means for Central government employees. Source: PIB 

HERE IS ALL YOU NEED TO KNOW ABOUT THE LONG WAIT FOR ALLOWANCES:

  1. In June last year, the Narendra Modi Cabinet approved the recommendations of the Seventh Pay Commission which led to a 14.27 hike in basic pay.
  2. On allowances, the Seventh Pay Commission recommended doing away with 53 of the 196 allowances for Central government employees and merging another 37 allowances.
  3. The pay commission also suggested reducing the House Rent Allowance (HRA) rates for government employees by 2-6 per cent for X, Y, Z cities. For metros, it suggested bringing down the HRA from 30 per cent to 24 per cent.
  4. Government employees, who were already disappointed with the basic pay hike, protested against the Seventh Pay Commission's recommendations on allowances.
  5. The Modi government formed a committee under Finance Secretary Ashok Lavasa in July last year to review the recommendations on allowances.
  6. The Ashok Lavasa committee, after several extended deadlines, submitted its review report to Finance Minister Arun Jaitley on April 27.
  7. The Lavasa report was first sent to the Department of Expenditure for a round of screening. Subsequently, the report was presented to the Empowered Committee of Secretaries (E-CoS).
  8. The Empowered Committee of Secretaries (E-CoS) met on June 1 to discuss the Ashok Lavasa panel's report and then forwarded the same to the Union cabinet.
Source - India Today

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