The suspense on reformed allowance structure for central government employees could be over this evening if the Union Cabinet takes a call on the proposals of Empowered Committee of Secretaries (E-CoS) on allowance structures when it meets today.
The Empowered Committee prepared its proposals on changes in allowances like House Rent Allowance (HRA), Dearness Allowance (DA), etc based on recommendations by the Committee on Allowances led by Finance Secretary Ashok Lavasa. The review committee was formed by the Cabinet last year in August. Issues of hike in basic pay and payment of arrears against revised allowance structure are also expected to be taken up in the meeting today.
Here are the key 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. Changes approved by the Cabinet last month included retention of percentage-based regime of disability pension for defence pensioners. Pensions of pre-2016 pensioners were revised as per the second formulation multiplying existing pension by a multiplication factor of 2.57, though the pensioners were to be given the option of choosing the more beneficial of the two formulations according to the 7th CPC recommendations.
9. The Union Cabinet had already approved the recommendations regarding pay and pension for central government employees and pensioners back in August last year. The annual pension bill alone of the Central Government is likely to be around Rs 1.7 lakh crores.
10. The Cabinet may consider demands of the central government employees when it meets today.