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“The real enhancement of HRA benefits that the Central Government employees were entitled to after the implementation of the Seventh Pay Commission have not yet been given.”
“The recommendations of the Seventh Pay Commission have been implemented for the Central Government employees with effect from January 1, 2016 onwards. Much to the irritation and disappointment of the employees, although the centre has implemented the recommendations, it has not yet made up its mind about the allowances, despite the fact that 12 months have ended.”
Pay Commission is constituted once every ten years to revise the salaries and pension of Central Government employees and pensioners. Accordingly, the Seventh Pay Commission was constituted, which submitted its recommendations on 19.11.2015 to the Central Government. The Central Government accepted all the recommendations and had announced on 29.6.2016 that it would implement all the clauses without making any substantial alterations, with effect from 01.01.2016.
Since only meagre increments were given, lakhs of Central Government employees were sorely disappointed.
Among the most important aspects of the salary increment is the House Rent Allowance (HRA). House Rent Allowance of an employee was calculated at 10, 20, and 30 percent of the basic salary, based on the population of the city where the office was located. The Seventh Pay Commission recommended that it be revised to eight, 16, and 24 percent respectively.
Various Central Government Employees Federations had requested the government to increase the House Rent Allowance percentages. The government immediately accepted their request and announced the constitution of a High Power Committee to re-examine all the allowances. Until then, it said, the allowance rates recommended by the Sixth Pay Commission would prevail.
As a result, the House Rent Allowance is currently being offered as recommended by the Sixth Pay Commission.
The employees meanwhile worriedly claim that they now understand the reason why the Central Government had so eagerly accepted their demand to revise the House Rent Allowance. They believe that the Central Government had constituted a committee in order to delay the issue indefinitely.
House Rent Allowance would have been the biggest constituent of salary hike in the Seventh Pay Commission. A year has passed and the government continues to drag its feet in deciding on the most important allowance.
7th Pay Commission report says in the Financial Implications – Chapter of 16 as follows…
16.1 The financial impact of the recommendations of this Commission will be reflected through increases in expenditure on Pay, Allowances and on Pension. The likely quantum of increase on account of each of these is summarised below
The total financial impact in the FY 2016-17 is likely to be ₹1,02,100 crore, an increase of nearly 23.55 percent over the Business As Usual scenario.
Pay : 16.2 Based on the current trend, the total expenditure on Pay (including DA, but excluding other allowances), during the year 2016-17, without factoring in the recommendations being made by this Commission, is expected to be ₹2,44,300 crore. After implementation of the recommendations of the VII CPC, this is likely to rise to ₹2,83,400 crore, reflecting an increase of ₹39,100 crore (16.00%).
Allowances : 16.3 The increases in allowances relate to the following:
a) House Rent Allowance (HRA): This accounts for the principal increase in the expenditure on allowances since it is calculated as a percentage of the basic pay and the rise in basic pay based on recommendations of the Commission would be reflected as increased HRA. The expenditure on account of HRA is likely to go up from ₹12,400 crore to ₹29,600 crore, an increase of ₹17,200 (138.71%). This figure also includes an expenditure of ₹3,700 crore that is likely to occur on account of the expansion in coverage of HRA benefiting personnel serving in the CAPFs.
b) Transport Allowance (TPTA): Since TPTA is already fully indexed to DA, there will be no financial impact of the Commission’s recommendation regarding this allowance.
c) Other Allowances: The expenditure on account of the other allowances is likely to go up from ₹24,300 crore to ₹36,400 crore, an increase of ₹12,100 crore (49.79%)