1. One year after 7th Pay Commission implementation, government set to clear revised allowances for central staff

One year after 7th Pay Commission implementation, government set to clear revised allowances for central staff

A year after implementation of the new pay- and pension-related recommendations of the Seventh Central Pay Commission (CPC), the government is likely to approve the revised allowances proposed by it for central government staff after the ongoing state elections are over, by March 15.

By: | New Delhi | Updated: February 17, 2017 12:44 PM
Taking note of employees’ representations, a finance secretary-led panel is looking at HRA of 30% of basic pay for those in cities with a population of over 5 million, against 24% recommended by CPC, the sources said. (Reuters)

A year after implementation of the new pay- and pension-related recommendations of the Seventh Central Pay Commission (CPC), the government is likely to approve the revised allowances proposed by it for central government staff after the ongoing state elections are over, by March 15. The reworked allowances are likely to be effective from April 1 and at least in the case of the employees in metro cities, the house rent allowances (HRA) could be a little more generous than the CPC’s award, sources told FE.

Taking note of employees’ representations, a finance secretary-led panel is looking at HRA of 30% of basic pay for those in cities with a population of over 5 million, against 24% recommended by CPC, the sources said. In the Sixth CPC award period (2006-2015), HRA was 30% for these cities. A draft Cabinet note for implementation of the revised allowances would be circulated soon, the sources said. HRA accounts for about 60% of the total allowances bill.

The financial implication of revised allowances would be broadly in line with the CPC’s estimate of around R29,300 crore (including for the railways) in the first year. The secretaries’ panel is reviewing the commission’s recommendations pertaining to allowances including rationalisation of some 196 existing benefits. The pay panel has suggested the abolition of 52 benefits and merger of 36 with existing ones to end their separate identities.

With just R4,500 crore additional allocation in the Budget (factoring in business-as-usual growth) for allowances and assuming R7,600 crore expenditure would be borne by the railways, the additional allocation required from the general Budget could be around R17,000 crore, sources said.

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This, they added, could be managed without much stress on other expenditure heads, provided the budgeted revenue receipts hold good. Given that currency notes extinguished (reported estimates vary from R30,000 crore to R1.5 lakh crore) as well as extra taxes to be paid by people under the two income disclosure schemes (IDS and PMGKY), the government has enough cushion next year, the sources said, even as many analysts reckon that the Budget assumptions were based on optimistic estimates of nominal GDP growth for FY17 and hence FY18.

On June 29, 2016, the government accepted the pay- and pension-related recommendations of CPC for over 10 million central government staffers and pensioners, entailing additional cost of R84,933 crore in FY17. In the FY18 Budget, the government has not explicitly provided for additional costs to be incurred after implementation of the revised allowances under CPC. The Centre’s allowance expenditure is pegged at R69,222 crore (excluding defence) in FY18, just 7% higher than R64,677 crore in FY17, factoring in business-as-usual growth in expenditure.

“It was a conscious decision not to provide for additional expenditure towards allowances in the FY18 Budget as the secretaries’ committee had not finalised its report. We will provide for it as and when a decision is taken in this regard,” a senior finance ministry official said.

Some government employees see the formation of the secretary panel itself as a delaying tactic, which helped the government save on additional costs towards allowances in FY17 and redeployed the resources to give a spending boost of R36,000 crore to various programmes.

Unlike pay and pension, allowances are paid prospectively. Salary revision took effect from January 1, 2016. The pay panel had given an overall 23.55% increase in pay, allowances and pensions, including 16% pay rise, 63% surge in allowances and 23.6% increase in pension.

  1. S
    Srinath
    May 21, 2017 at 3:11 pm
    When will 7CPC get implemented at least with initial policies? If no change in Policies then who got benefited from that.? Trade Unions or government? Eagerly waiting for best policies in retirement also.
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      AC Sharma
      Apr 27, 2017 at 3:41 pm
      After waiting 7th pay commission for 10 years and retired on 31st December 2015 no benefits. 31st December 2015 should be included in 7th pay commission for all the benfits.
      Reply
      1. D
        Dishum
        Mar 14, 2017 at 10:31 am
        Please declare good allowance and good dearness allowance . Pls Pls Pls .We r anxiously waiting .
        Reply
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          RAM
          Feb 17, 2017 at 9:53 am
          There is no mention in the above write up about the benefit of option 1 to pre 2016 retirees.7cpc recommended the above option 1 benefit.Government approved. A committee of Secrataries has submitted the recommendations. It is good that the serving employees are going to get the additional allowances.But Still the implementation of option 1 is pending.No word is mentioned about option 1 scheme implementation.FE may please bring it to the notice of Govt for speedy resolution.
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            ashok
            Feb 21, 2017 at 8:30 am
            for those who don't avail HRA any benefits ? some scentific organizations dole out PRIS . will it be revised on new basic
            Reply
            1. A
              ashok
              Feb 21, 2017 at 8:27 am
              will the allowances be disbursed before the government ends its tenure ?
              Reply
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                p k
                Feb 17, 2017 at 12:03 pm
                It is not known if the Committee of Secretaries have submitted the Report on Option 1 which has special relevance to the pensioners.Can any body throw light on this and in case the Report has been submitted, the highlight of the proposals agreed to
                Reply
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                  santhanam
                  Feb 17, 2017 at 2:37 pm
                  Option one no ment FE pleasei remind the secretaries
                  Reply
                  1. S
                    s ramji
                    Feb 17, 2017 at 5:56 am
                    Autonomous GOI bodies which are on par with Central govt employees have not bn paid revised Pay, it is not cler whether these will ever get the benefit. Some educational insutions charge fees fixed by govt, if these insutions have to earn additionally to give to their employees then GOI hs to remove the fee limits. Will government pay revised pay for these Autonomous body
                    Reply
                    1. S
                      Sukhdev Raj
                      Feb 17, 2017 at 1:31 pm
                      What about FMA to pensioners. And also OROP implementation as it is the only benefit to pensioners. No other alle hike is enled to pensioners.
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                        Debosree
                        May 8, 2017 at 7:50 pm
                        Thanks Sir it is a major issue for we pwnioners/family pensioners asnexceptnbasic pension, Da, andFMA we do not get anything but when we go to market to buy for item, daily needs, medicines we have to pay the same price as shopkepers don't know that we get a meagre pension and p our days with a great hardships. Even now DA has also reduced and its not increasing more than 2 .
                        Reply
                      2. V
                        Vinod Gurjar
                        Mar 5, 2017 at 1:41 am
                        Good information.... thanks
                        Reply
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