The Union Cabinet could take up proposals on 7th pay commission allowances (including HRA) next week, Shiv Gopal Mishra, the convenor of National Joint Council of Action (NJCA), told NDTV. The employee union leader also said that there is a possibility of higher HRA or house rent allowance than that recommended by the 7th pay commission. HRA accounts for bulk of the total allowances. The Union Cabinet on Wednesday did not take up proposals related to 7th pay commission allowances, including HRA, as it was not part of the meeting's agenda, sources told NDTV. Finance Minister Arun Jaitley is on an official visit to South Korea. National Joint Council of Action (NJCA) is a joint body of unions representing central government employees.
Nearly 50 lakh central government employees could get revised allowances under 7th pay commission award, including HRA or house rent allowance, from July, Financial Express reported last week. The report, citing sources, also said that the Cabinet may decide on 7th pay commission allowances this month. The report also said that the government may approve higher HRA than recommended by the seventh pay commission.
The Ashok Lavasa committee, which examined the 7th pay commission's recommendations on allowances, submitted its report to the finance minister on April 27. An Empowered Committee of Secretaries was set up to screen the report and firm up proposals for the Cabinet.
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 disbursement of 7th pay commission allowances is expected to give a further boost to consumer spending and thus the broader economy.
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 7th pay commission had recommended that house rent allowance be paid at the rate of 24 per cent, 16 per cent and 8 per cent of the new basic pay, depending on the type of city. The 7th pay commission had also recommended that the rate of HRA be revised to 27 per cent, 18 per cent and 9 per cent when DA or dearness allowance crosses 50 per cent, and further revised to 30 per cent, 20 per cent and 10 per cent when it crosses 100 per cent. With regard to allowances, employee unions have demanded HRA at the rate of 30 per cent, 20 per cent and 10 per cent.
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.