7th Pay Commission: Progress In Implementation Of New Allowances

Date : 16.9.2016

7th Pay Commission: Progress In Implementation Of New Allowances

New Delhi: Progress has been reported in implementation of new allowances to central government employees – but the Prime Minister’s Office (PMO) has been warned the committee on allowances that the submission of report must be done soon.

Finance Secretary Ashok Lavasa, who is heading the committee on allowances.

“Discussions between the central government employees unions and the committee on allowances headed by Finance Secretary Ashok Lavasa have been taking place in the face of a strong demand for hike in allowances by the the central government employees, it would make a major problem for government if the matter was not resolved within this month,” a central government union leader said.

The central government employees unions claimed that progress was “unacceptably slow”.

Finance Ministry’s official told the Sen Times on Wednesday “dragging this matter on beyond this week could cause severe difficulties”. As pressure mounted on the Finance Ministry by the PMO, however a top official reported “productive progress and the aim is to submit the discussions by this month.”

The Union Cabinet cleared the recommendations of 7th Pay Commission in respect of the hike in basic pay and pension on June 29 but decision on its suggestions relating to allowances has been referred to the Committee on allowances.

The 7th Pay Commission found inadequate the justifications offered by the Ministries for 196 allowances. The government was asked to suggest rationalisation of a variety of allowances and recommended abolition of 51 allowances and subsuming 37 others. The committee on allowances is examining the Commission’s recommendations.

The 7th pay panel had calculated the total impact of the increase in salaries and allowances at Rs 1.02 lakh crores of which it had estimated the increase in pay to be at Rs 39,100 crore and allowances at Rs 29,300 crores.

In percentage terms, the overall increase according to the 7th Pay Commission was about 23.5% where the increase in pay was 14.28% and the allowances at 63%.

The significant jump in allowances could be on account of house rent allowance (HRA), which has been recommended for Class X, Y and Z cities at 24%, 16% and 8% respectively of new pay matrix, besides others.

The central government employees now get minimum pay Rs 18,000 and the maximum at Rs 2.25 lakh for secretary-level officers. Accordingly, the house rent allowance (HRA) for secretaries would be more than Rs 56,000.

However, this is not the first time that allowances bill is likely to be as much or more than the pay bill. In 2014-15, the salary bill as per actual expenditure was Rs 53,371 crore while the allowances was Rs 76,613 crore.

“Allowances contribute 63 percent in the pay hike recommendation. So, the committee on allowances will have carefully weigh the risk of doing to raise the allowances of the central government employees against the risk of economy can afford. Accordingly, they will go for ditto, the 7th pay commission recommendations for allowances, however, it could be a slight change, but not overall,” the Finance Ministry official said.

However, he assured, “anyhow, the allowance under the new pay matrix will be implemented from October 1, 2016.”