7th Pay Commission: Final decision on HRA, allowances for central government employees likely on June 28

Central government employees' wait for a confirmation of allowance structure under the 7th Pay Commission could end on Wednesday if the Cabinet takes up the issue on its agenda tomorrow. The wait has been endless with repeated delays, despite the Empowered Committee of Secretaries submitting its report to the Finance Minister Arun Jaitley on June 1.

There is hope for a final decision on Wednesday as it is believed that Finance Minister Arun Jaitley discussed the matter with Prime Minister  Narendra Modi before the PM left for the three-nation tour.

The issue of allowances for central government employees under the 7th Pay Commission has been reeling for over a year with reviews at different levels. However, a definite outcome has eluded adding to the frustration among the central government employees. The Union Cabinet was expected to approve the proposal on allowances last week but it got delayed as the Prime Minister Modi was visiting Washington.

It was reported that the House Rent Allowance or HRA could be approved at 27 per cent of the basic pay. The Pay Panel had brought down, in its recommendation, the HRA to 24 per cent, 16 per cent and 8 per cent of the basic pay, depending upon the city the employee is posted in. 

The sixth pay commission had pegged the HRA at 30 per cent, 20 per cent and 10 per cent.

The Commission not only brought down the HRA but also done away with as many as 52 allowances. It recommended  that out of a total 196 allowances, 52 be discontinued and 36 other allowances should be subsumed under other allowances.

Drastic change in HRA and other allowances did not go well with the central government employees who expressed their opposition and asked the government to take a re-look at the proposed recommendations.

Coming under pressure from nearly 47 lakh central government employees, the Cabinet formed a Committee on Allowances under Finance Secretary Ashok Lavasa last year in June. The Committee was tasked to look into the extensive changes suggested by the 7th Pay Commission.

The Lavasa Committee handed over its review report to the Finance Minister in April after consulting representations from various government departments. The report, post approval, was forwarded to E-CoS for their consideration and consolidation.

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