The Union Cabinet on Wednesday approved the recommendations of the 7th Pay Commission on allowances with 34 modifications, said Finance Minister Arun Jaitley. The revised rates, which comes into effect on July 1, will benefit 48 lakh central government employees. The increased allowance, which comes into effect from July 1, will impose an additional annual burden of Rs 30,748crore on the exchequer.
Here are all the questions answered
What were the earlier recommendations
The cabinet last year approved the recommendations of the Seventh Pay Commission which led to a 14.27 hike in basic pay. The commission recommended doing away with 53 of the 196 allowances for Central government employees. It proposed merger of another 37 allowances. It also suggested reducing the House Rent Allowance (HRA) rates for government employees. For metro cities, it suggested reducing the HRA from 30 per cent to 24 per cent. This was followed by protests by government employees who found the revision inadequate. The government then formed a committee under Finance Secretary Ashok Lavasa in July last year to review the recommendations on allowances.
What are the major modifications and who will it benefit
HRA: HRA rates will be revised upwards in two phases to 27%, 18% and 9% when DA crosses 50% and to 30%, 20% and 10% when DA crosses 100%. Keeping in view the current inflation trends, the government has decided that these rates will be revised upwards when DA crosses 25% and 50% respectively. This will benefit all employees who do not reside in government accommodation and get HRA.
Siachen Allowance: The government has decided to enhance the rates of Siachen Allowance which will now go up from the existing rate from Rs14,000 to Rs 30,000 per month for Jawans & JCOs (Level 8 and below) and from Rs 21,000 to Rs 42,500 per month for Officers (Level 9 and above). With this enhancement, Siachen Allowance will become more than twice the existing rates. It will benefit all the soldiers and officers of Indian Army who are posted in Siachen.
Dress Allowance: Dress Allowance is to be paid annually in four slabs — Rs 5000, Rs 10,000, Rs 15,000 and Rs 20,000 per annum for various category of employees. This allowance will continue to be paid to Nurses on a monthly basis in view of high maintenance and hygiene requirements. The government has decided to pay higher rate of Dress Allowance to SPG personnel keeping in view the existing rates of Uniform Allowance paid to them (which is higher than the rates recommended by the 7th Pay Commission as also their specific requirements. The rates for specific clothing for different categories of employees will be governed separately.
Tough Location Allowance: These are allowances based on geographical location which has tough living conditions. The areas under TLA have been classified into three categories and the allowance will be in the range of Rs 1000 – Rs 5300 per month. The 7th Pay Commission had recommended that TLA will not be admissible with Special Duty Allowance (SDA) payable in North-East, Ladakh and the Islands. The government has decided that employees will be given the option to avail of the benefit of SCRLA at pre-revised rates along with SDA at revised rates.
Which recommendations were rejected
The government has decided not to abolish 12 of the 53 allowances which were recommended to be abolished by the 7th pay commission. It has also been decided that 3 of the 37 allowances recommended to be subsumed by the 7th pay commission will continue as separate identities. This has been done on account of the unique nature of these allowances. The rates of these allowances have also been enhanced as per the formula adopted by the 7th pay commission. This will benefit over one lakh employees belonging to specific categories in Railways, Posts, Defence and Scientific Departments.
The recommendation to abolish Ration Money Allowance (RMA) and free ration to Defence officers posted in peace areas has been rejected. This will benefit 43000 Defence officers. The recommendation to merge Technical Allowance (Tier – II) with Higher Qualification Incentive for Defence personnel was also rejected. The Government has decided not to discontinue Technical Allowance. The recommendations of 7th pay commission to abolish Cycle Allowance, granted mainly to Postmen and trackmen in Railways, has not been accepted. The recommendations of 7th pay commission to abolish Launch Campaign Allowance and Space Technology Allowance has not been accepted.
What is the impact on government?
The modifications approved by the Government in the recommendations of the 7th pay commission allowances will lead to a modest increase of Rs 1448.23 crore per annum over the projections made by the 7th pay commission. The 7th pay commission, in its report, had projected the additional financial implication on allowances at Rs 29,300 crore per annum. The combined additional financial implication on account of the 7th pay commission recommendations along with the modifications approved by the Cabinet is estimated at Rs 30748.23 crore per annum.