Monday, 20 February 2017

7th Pay Commission: Government all set to clear revised allowances for central staff from April 1


7th Pay Commission: Government all set to clear revised allowances for central staff from April 1
The 7th Central Pay Commission (CPC) recommended HRA of 24% of the basic pay for those cities with population over 5 million.

New Delhi, Feb 18: The Union Government is all set to clear revised allowances for the central government staff, precisely after a year of the implementation of the 7th Pay Commission. As per reports, one year after the implementation of the new pay and pension scheme, as recommended by the 7th central pay commission, the central government employees might have something to rejoice about after the assembly elections in 5 states are over. Reportedly, the revised allowances are likely to be effective from April 1. (ALSO READ: Committee on Allowances likely to raise HRA to 30 per cent)

House rent allowances (HRA) accounts for about 60% of the total allowances bill, as The Financial Express stated and according to the revised allowance scheme, the employees, mostly in the metropolitan cities are expected to receive greater HRA than the 7th Pay Commission actually recommended. The 7th Central Pay Commission (CPC) recommended HRA of 24% of the basic pay for those cities with a population over 5 million. But the revised HRA which is being looked at by the Finance Secretary-led panel is 30%. Notably, in the 6th Pay Commission, the HRA was at 30% as well for the cities with more than 5 million people. A draft of the cabinet note for implementation of the revised allowance is expected to be circulated soon.
As per reports, the financial implication of these revised allowances will be in line with the Central Pay Commission’s estimate of around Rs. 29,300 crores, which shall also include the railways, in the first year. The panel led by the Finance secretary is also reviewing the CPC’s recommendation regarding allowances. The pay panel has also recommended scrapping of 52 benefits while merging 36 already existing benefits.
Notably, there has been only an additional allocation of Rs. 4,500 crore in the Budget for allowances and it has been assumed that the Railways will bear Rs 7,600 crore of expenditure. But as per sources stated by FE, still, the additional allocation which will be required from the General Budget could be somewhere around Rs. 17,000 crores.

The Government has, reportedly, enough leg space, thanks to the demonetisation move and the extra taxes the people had to pay under the income disclosure schemes. But according to experts, the Budget assumptions were based on optimistic estimates of nominal GDP growth for financial year 17 (FY17) and thus for FY18.

Many have been complaining about the delay in the decision of allowances to the government employees, with some claiming the formation of the panel led by the Finance Secretary as a delaying tactic itself. But this has helped to boost the spending of the government in various programmes by around Rs. 36,000 crores in FY17.

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