- Lavasa committee has suggested some changes to allowances
- Disbursement of allowances will boost consumer spending
- The decision will benefit nearly 50 lakh employees
The Lavasa committee suggested some modifications in some allowances that are applicable universally to all employees as well as certain other allowances which apply to specific employee categories, the finance ministry had said in a statement. Economists say that 7th pay commission allowances are expected to give a further boost to consumer spending and thus the broader economy, analysts say.
The Reserve Bank has however flagged upside risks to inflation from disbursement of revised 7th pay commission allowances. "At the current juncture, global political and financial risks materialising into imported inflation and the disbursement of allowances under the 7th central pay commission's award are upside risks. The date of implementation of the latter is still not announced and as such, it is not factored into the baseline projections," the RBI said in its latest monetary policy statement last week.
The government had last year accepted the recommendation of Justice AK Mathur-headed Seventh Pay Commission in respect of the hike in basic pay and pension. The 7th Pay Commission's recommendations relating to allowances were referred to the Ashok Lavasa committee.
The 7th pay commission had recommended that of a total of 196 allowances, 52 be abolished altogether and 36 be abolished as separate identities by subsuming them in another allowance.
The Cabinet had earlier approved modification in recommendations of the 7th pay commission relating to the method of revision of pension of pre-2016 pensioners and family pensioners based on recommendations of a high-level panel. The decision will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners.