The Cabinet will take up the matter pertaining to higher allowances and HRA as per the 7th Pay Commission this month. Finance Minister, Arun Jaitley will fix the agenda for the Cabinet to take up the matter this week. However the good news is that the central government employees will start getting their revised allowances and HRA from July 18, 2017 onwards. This news will bring some cheer to all the central government employees who have anxiously waited for updates on their higher allowances and HRA for several months now

The issue of allowance reforms suggested by the 7th Central Pay Commission was not taken up in the last Cabinet meeting on June 7 as it was not part of the agenda. Central government employees are banking on this meeting to end their wait for allowance rates. New allowances, including House Rent Allowance (HRA), could be implemented as early as the third week of June, some reports claimed.

Central government employees are most concerned about HRA, which the 7th Pay Commission recommended to be reduced. HRA rates could be capped at 27 per cent of the basic pay for Class X cities, which have a population exceeding 50 lakhs, as opposed to the 30 per cent awarded by the 6th Pay Commission.

The 7th Pay Commission has recommended HRA should be brought down to 24 per cent. The Empowered Committee of Secretaries (E-CoS) capped it between 25 per cent and 27 per cent after reviewing suggestions by Committee on Allowances.

Central government employees are in for better returns even with the slightly lowered HRA rates, owing to the increase in basic pay almost by 25 per cent.

The Ashok Lavasa Committee had reviewed the recommendations of 7th Pay Commission pertaining to allowances on orders from the Cabinet. It submitted its findings to Jaitley on April 27 and was later taken up by E-CoS. The proposals by committee of secretaries based on its deliberations over the Lavasa Committee recommendations was handed over to the Finance Minister on June 1 and was set to be presented before the Cabinet for approval.

Moreover, in its meeting last Wednesday, the Monetary Policy Committee had pointed out that payouts under the 7th Pay Commission’s awards would boost consumption fuelling inflation.