The Union Cabinet will put an end to the wait for revised allowances under the Seventh Pay Commission as a decision is expected to be reached when it convenes tomorrow. After being dropped from the agenda of the last Cabinet meeting, chances are good that Finance Minister Arun Jaitley will table the proposals in this regard at the one tomorrow.
The Empowered Committee of Secretaries (E-CoS) had submitted its suggestions to Jaitley on June 1 after considering the review report from Committee on Allowances led by Finance Secretary Ashok Lavasa. Around 50 lakh central government employees have been waiting for revised allowance rates to be implemented since.
The E-CoS report includes proposals on House Rent Allowance (HRA), Dearness Allowance (DA) along with others, based on the Lavasa Committee recommendations. Arrears against revised allowance rates are also expected to feature in the list of proposals set to be put up before the Cabinet.
Meanwhile, reports suggest that Cabinet may decide to not pay arrears for the period of almost a year that allowance rates have been delayed. Saving funds is cited as one of the reasons behind this probable move.
The government has been able to save Rs 2,200 crore per month or Rs 40,000 crore cumulatively since January 1 last year because of the delays in revised allowances distribution. The loan waiver extended by the Maharashtra government to farmers of the state may also be a factor, stated a Times of India report.
On the other hand, Cabinet may also look into demands of higher allowance rates raised by the central government employees to compensate for delays in implementing the said rates. Central government employees want the rates to be retained at 30 per cent, 20 per cent and 10 per cent for Class X, Y and Z cities, even if they are not hiked. The Committee has capped HRA between 2 per cent and 27 per cent. Several reports suggest that the new allowances will be implemented from July.
The pay commission had recommended abolition of or subsuming of allowances like acting, assisting cashier, cycle, condiment, flying squad, haircutting, rajbhasha, rajdhani, robe, shoe, shorthand, soap, spectacle, uniform, vigilance and washing.
The Lavasa Committee was constituted in June last year after the government implemented the recommendations of the Pay Commission.
The Seventh Pay Commission had recommended abolishing 53 of the 196 allowances, and subsuming 36 other allowances. It also recommended slashing the House Rent Allowance (HRA) -- for metros, commission recommended bringing down the HRA from 30 per cent to 24 per cent.
The Seventh Pay Commission had recommended the rate of House Rent Allowance (HRA) be kept at 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively.
Government employees protested the recommendations of the Seventh Pay Commission, following which the Narendra Modi-government formed a committee under the Finance Secretary to review the suggestions.
The Committee on Allowances was constituted in July and after an extended deadline was asked to submit its report to the government by February 22, 2017. However, it submitted its review report on April 24.
The report was then taken up by the E-CoS for consideration and consolidation, after passing through Department of Expenditure, so that it can be presented before the Cabinet.