7th Pay Commission Allowances – Only 7% increase has been factored in to Budget 2017-18

Date : 22.2.2017

7th Pay Commission Allowances – Only 7% increase has been factored in to Budget 2017-18

7th Pay Commission Allowances – Only 7% increase has been factored in to Budget 2017-18 – But the least increase recommended by 7th Pay Commission in HRA alone is more than 100%

While all Central Government Employees still believe increase in allowances based on recommendations of 7th Pay Commission is still on the cards, signs of Govt’s preparation towards the same are not encouraging.

For instance, the budget allocation made by the Govt towards Allowances payable in respect of Central Government Employees for the year 2017-18 is Rs. 69,221.70 Crores. Also, the Budget estimate with respect to allowances payable to Central Government Employees in the year 2016-17 has been revised to Rs. 64,677.43 crores.

So, the Govt expects that there will be an increase of 7% increase in the expenditure as a result of payment of various allowances to Central Government Employees in the year 2017-18 compared to the year 2016-17.

However, it is not clear whether Government has taken in to account the expected increase in the allowances on account of implementation of 7th Pay Commission, which is kept in abeyance in the pretext of examination of recommendation of the Commission on allowances by a Committee.

As this Allowances Committee has already taken 8 months to study the recommendations of 7th Pay Commission on allowances, it is expected to submit its views sooner or later atleast before the financial year 2017-18.

In that case, does the Govt believe that the Allowances Committee would only recommend an increase in allowances not more than 7% of what is being paid in 2016-17?

Remember, all the Allowances including the House Rent Allowance (HRA) are being paid now only in the old (6th CPC) Rates calculated on pre-revised Basic Pay.

Now, Let’s do a small calculation in respect of House Rent Allowance (HRA) alone, to acertain whether the increase in HRA recommended by 7th Pay Commission is only 7%.

6th CPC Pay in Pay Band = Rs. 23800

6th CPC Grade Pay = Rs. 5400

Total Basic Pay = Rs. 29200

HRA at the rate of 30% = Rs. 8760/-

7th Pay Commission Basic as against 6th CPC basic Pay of Rs. 29,200	= Rs. 75,600/- (Level 9 / Index 13 of 7th CPC Pay Matrix)
Rate of HRA recommended by 7th Pay Commission as against 30% HRA in old rate	= 24%
Quantum expected HRA if 7th Pay Commission recommendation on HRA is accepted by Govt as such	= 75600 X 24/100 = Rs. 18,144/-
Increase in 7th CPC HRA compared to 6th CPC HRA	=107%

The above illustration shows that the increase in amount that was allocated by Govt towards Allowances payable to Central Government Employees for the year 2017-18 to the extent of 7%, is never going to meet out the quantum of increase in allowances recommended by 7th Pay Commission.

Let’s hope Govt comes out with some meaningful revision of allocation in Budget 2017 towards allowances and implement a reasonable increase in Allowances, as the increase in allowances to be spelled out in the near future is not going change till 2026 (except for allowances that are linked with DA).

Source for Union Budget Estimate in 2017-18 in respect of allowances payable to Central Government Employees:

The Hindu Businessline