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7th Pay Commission: Cabinet likely to hike central government employees' HRA in next meet

Central government employees' allowances have been missed in two Cabinet meetings now.

With Finance Minister Arun Jaitley returning from his South Korea trip later this week and Prime Minister Narendra Modi available next week, the central government employees can expect the Union Cabinet to finally close the case on allowances under Seventh Central Pay Commission.

The Cabinet had already dropped the ball on this in two weeks in a row - first time because the PM was out of the country on a four-nation trip and then earlier this week as Jaitley left for Seoul to attend the second annual meeting of Asia Infrastructure Investment Bank and 5th Korea-India Finance Ministers' Meeting.

According to reports, the allowance rates might be increased, as opposed to the pay panel's recommendations to make it worth the central government employees' wait. Around 50 lakh employees have been waiting for an update on allowance rates since August last year, when the Cabinet approved pay and pension modifications suggested by the pay panel, but stayed the same on allowances owing to their extensive nature.

The most awaited decision is regarding House Rent Allowance or HRA which forms a significant part of the allowance structure for central government employees. The 7th Pay Commission had recommended the rates to be slashed to 24 per cent, 16 per cent and 8 per cent of basic pay for Class X, Y and Z cities respectively as opposed to 30 per cent, 20 per cent and 10 per cent, as stipulated by the previous pay panel.

In its deliberations, the Empowered Committee of Secretaries (E-CoS) capped HRA rates between 25 per cent and 27 per cent. The Cabinet may approve higher rates than this on demands from the central government employees. Even if not, their paycheck will see a decent increase owing to the hike in basic pay in accordance to the 7th Pay Commission.

The pay panel had recommended abolishing 53 of the 196 allowances, and subsuming 36 other allowances like acting, assisting cashier, cycle, condiment, flying squad, haircutting, rajbhasha, rajdhani, robe, shoe, shorthand, soap, spectacle, uniform, vigilance and washing.

Government employees protested the recommendations of the Seventh Pay Commission, following which the Narendra Modi-government formed a Committee on Allowances under Finance Secretary Ashok Lavasa to review the suggestions. It was constituted in July and after an extended deadline was asked to submit its report to the government by February 22, 2017. The review report was finally submitted in April this year.

The report was then forwarded to the Empowered Committee for consideration and consolidation which, in turn, submitted it to Jaitley. He is now expected to present the same before the Cabinet for the final nod.

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