Cabinet to discuss 7th Pay Commission allowance structure: Key things to know about central govt employees' pay hike

The Union Cabinet will soon decide the allowance rates for central government employees. In the meeting scheduled on Wednesday , the Cabinet will ponder over the proposals submitted by the Empowered Committee of Secretaries (E-CoS) regarding House Rent Allowance (HRA), payment of arrears over revised allowance rates and hike in basic pay among others.

The decision, likely to affect around 55 lakh central government employees, has been a long time coming, since the Cabinet approved recommendations of 7th Pay Commission over pay and pension last year. Considering the radical changes in the allowance structure suggested by the pay panel, a Committee on Allowances under Finance Secretary Ashok Lavasa was formed to review them.

Lavasa Committee also incorporated representations regarding allowances from various government departments and agencies, before handing over the review report to Finance Minister Arun Jaitley on April 24. After getting the green signal from Department of Expenditure, the suggestions by the review committee were sent to E-CoS for further deliberations and consolidation

Here are the main points related to 7th Pay Commission:

1. The Empowered Committee capped the HRA rates between 25 per cent and 27 per cent. The 7th Pay Commission had called for 24 per cent, 16 per cent and 8 per cent of basic pay for Class X, Y and Z cities respectively. The central government employees have demanded for 30 per cent, 20 per cent and 10 per cent HRA based on pay and pension.

2. The pay panel had decided to revise HRA to 27 per cent, 18 per cent and 9 per cent if dearness allowance is more than 50 per cent of the basic pay. It will be further increased to 30 per cent, 20 per cent and 10 per cent if DA crosses the 10 per cent mark.

3. The pay panel had recommended that 52 allowances out of a total 196 should be scraped whereas 36 allowances, like electricity, entertainment, etc., should be subsumed into other allowances.

4. The Cabinet is also expected to take a call on increasing the basic pay for central government employees. The 7th Central Pay Commission had allowed only 14.72 per cent increase in basic pay.

5. Central government employees have been receiving allowances according to old rates laid down by the 6th Pay Commission as decision on the new rates were pending. Payment of arrears against the new allowance rates are also to be discussed by the Union Cabinet. Employees and staff unions have called for the revised rates to be applicable from January 1, 2016.

6. The Empowered Committee of Secretaries convened for a meeting on June 1 to finalise their proposals on the allowance structure after reviewing the recommendations by the Lavasa Committee. Following the meeting chaired by Cabinet Secretary Pradeep Kumar Sinha, a report was submitted by E-CoS to Finance Minister Finance Minister Arun Jaitley on the same day.

7. The central government employees' bodies, who have not been happy with the recommendations of the 7th Pay Commission, have stated that they may protest Cabinet decision over the allowance structure if they do not conform to their expectations. They have decided to wait for the decision though, before making a move.

8. The Cabinet may consider demands of the central government employees when it meets tomorrow.

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