1. 7th Pay Commission allowances: Good news for employees, no blame game likely, check out why

7th Pay Commission allowances: Good news for employees, no blame game likely, check out why

The Union Cabinet has approved the recommendations of the 7th Pay Commission on allowances with some modifications.

By: | Published: June 30, 2017 6:49 PM
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7th Pay Commission allowances: The Union Cabinet has approved the recommendations of the 7th Pay Commission on allowances with some modifications.  However, a lot of doomsayers have been saying that the cash in hand of employees is going to lead to a massive spending trend and the resultant negative might affect the economy and drive inflation higher. Now, there is no need for central staff to feel guilty, because a report says that there is unlikely to be any adverse impact on the larger economy. Here are reasons why:

Among all, House Rent Allowance (HRA) is the most publicly discussed allowances due to its coverage across people and linkages with CPI. As per 7th CPC recommendation, HRA is fixed at 24%, 16% and 8% for X, Y and Z category of cities (based on population).

The Cabinet has approved the HRA rates suggested by CPC with some modification by fixing lower bound of HRA at Rs 5400, Rs 3600 and Rs 1800 for X, Y and Z category of cities for employees falling in lower pay bracket based on 30%, 20% and 10% of minimum pay of Rs 18,000. Apart from this, the Cabinet also recommended the HRA to be revised upwards from the existing level to 27%, 18% and 9% and 30%, 20% and 10% when the Dearness Allowances (DA) crosses 25% and 50%, respectively, against the 7th CPC recommendation of 50% and 100%.

“The RBI consistently in its monetary policy review meetings is indicating that CPC recommendations have potential risks to inflation (around 30-40 bps). However, after a close look at the arithmetic of HRA allowances, as suggested by the Cabinet, we strongly believe that there will be no impact on CPI because at the suggested rates, even a top rank officer in the government will get HRA @ Rs 28,440 in metro cities (i.e. X cities), which is very low compared to the existing market rates. On a lighter note, one will not even get a single room in Mumbai. In this case instead of opting for HRA almost everyone will prefer to stay at government accommodated quarters,” said the SBI Ecoflash.

Secondly, when the DA crosses 25%, the increment in HRA for a top-ranked officer only increases by Rs 3555-Rs 7110. Hence, even if DA increases in future (currently DA at less than 5%), the HR impact will continue to be non-existent.

Hence on these accounts, the higher HRA as suggested by the Cabinet will have no impact on headline and core CPI. In CPI, housing has a weightage of merely 10%. “We maintain that CPI is expected to be sub-2% for the next two–three months, sub-3% for the next two months and sub-4% for Nov-Dec’17. The RBI will find it difficult to ignore the clamour for a rate cut and if the CPI data continues to be significantly benign (July CPI at a trough of possibly sub 1.5%), the chorus will get louder,” said the Ecoflash.

  1. I
    Ishwar s
    Jul 2, 2017 at 5:51 am
    Income Tax slab must be reviewed 500000/Rs. For a lower middle class senior ctizen. Modiji should put sharp mind FM in the center. Otherwise in 2022 people will vote to congress unwillingly.
    Reply
    1. H
      H.K. Patra
      Jul 1, 2017 at 9:00 pm
      Rich will become richest and poor be very poor. This is the system of hike of other allowances including HRA
      Reply
      1. A
        ASHOK
        Jul 1, 2017 at 8:25 pm
        You baastard paid media totally misguiding the general public about the pay allowances to CG EMPLOYEES.can You dare to to take the opinion positively from a single employee.you just writing what you are thinking or by taking money from government and simply publishing what the matter is circulating by government.
        Reply
        1. P
          Prabir
          Jul 1, 2017 at 6:58 pm
          This Govt has robbed the CG Employees of the arrears of the allowances that were actually due from 01-01-2016. Intentionally the delay was made to rob in the name of review and reconsideration of the recommendations. In other fields too, in the name of growth, interest rates are coming down sharply and various financial impositions are being thrust upon common men to facilitate the richer and super rich section of the country and to settle the NPAs of the banks. Subsidies to poor farmers hardly reach but by waiver of bank loans the richer section of the agriculturist benefit. "Sab ke saath sab ki Bikash" or " Kuchh ke saath baki ke binash" seems to be the ultimate motive. In the meantime GST has been introduced. But how the technically ignorant, both in terms of accounting and use of IT, shop keepers will handle this issue is a huge question. If they are given training who will aid them to acquire a basic computer, software and internet connection? Most of them are illiterate.
          Reply
          1. D
            dilipmodi
            Jul 1, 2017 at 6:09 pm
            I don't understand why journos like you are hyperventilating. We only got 14 rise and can not ask for rise for the next 10 year.Duck u but in private sector each job switch results in min 20 hike. No improvement in economy going to take place as we are paying more rent than hra and financial burden is to high
            Reply
            1. K
              KS Sreekumaran
              Jul 1, 2017 at 4:00 pm
              Pay Commission recommended multiplucation factor of 2. 57, 2. 62, 2. 67 etc etc. But govt allowed a uniform factor of 2. 57 only. So there is a loss of one increment in the fixation itself. The govt may re-consider at least income tax liability. Savings Rs. 200000, a standard deduction of Rs. 300000, Rs. 3-00 to Rs 5-00 5 , Rs. 5. 00 to Rs 7. 5 10 , Rs 7. 5 to Rs 10-00 20 , Rs 10. 00 to Rs. 15-00 lakhs 25 , and Rs 25. 00, lakhs above 30 .
              Reply
              1. K
                KS Sreekumaran
                Jul 1, 2017 at 3:46 pm
                What was the necessity of a Pay Commission/Panel? Secretary level committee's recomnendations are also more or less the same. The only thing is Givt. could save 18 months liability on allowances. It is pertinent to note that after a period of 10 long years the pay increase is only 14 . This only count at the time of retirement. Parallely income tax liability also increased exhorbitantly. Actually a real benefit is nominal.
                Reply
                1. M
                  Mohd Sayeed Anwar
                  Jul 1, 2017 at 1:00 pm
                  I think the money looted (if the arrears of the allowances are not paid) from the poor C G employees has been paid to the media.
                  Reply
                  1. A
                    A.M
                    Jul 1, 2017 at 5:30 pm
                    U Think Total Bad...
                    Reply
                  2. G
                    Gsmankan
                    Jul 1, 2017 at 12:28 pm
                    बनियो की सरकार सिर्फ लेना जानती है, देना नहीं
                    Reply
                    1. A
                      A.M
                      Jul 1, 2017 at 5:28 pm
                      Abe yehi Baniya Pure world men famous ho gaya hai.....Aur Jo baniya tha ab ye P. M bana hai...Khandan ke versat mein Bhik nahi mili....Samjhe
                      Reply
                      1. D
                        dilipmodi
                        Jul 1, 2017 at 6:13 pm
                        Pure world me famous par ne ad dene ke alawa kiya kya hai. ne mere surname ko bhi badnam kar diya
                    2. R
                      Renganathan
                      Jul 1, 2017 at 11:31 am
                      This implies that new rate HRA of below bar and only the media created the hype which is inwarranted. And by delaying it so far, no arrears will be paid which is nothing short of cheating. Understandably, those who had made a lot of hue and cry to accept the 7pc recommendations on HRA, quitely take less and now have foot in their mouths! Govt has little vto brag about their achievement.
                      Reply
                      1. S
                        S AHLUWALIA
                        Jul 1, 2017 at 11:26 am
                        Just a organised loot by GOVT OF INDIA....robbing the employees. NJAC members probably have been given hidden lollipop incentives to keep quiet....Defence means jeb ke saath pet PE bhi laat padi...ITS A SHAMEFUL AFFAIRS ...OUR FOREIGN ECONOMISTS PROFESSORS BECAME ADVISERS TO A LEGAL FINANCE MAN....ARE BEING PAID HANDSOMELY TO DENY THE LEGAL RIGHTS OF GOVT EMPLOYEES...SAD..
                        Reply
                        1. P
                          Pawankumar
                          Jul 1, 2017 at 10:39 am
                          Nick
                          Reply
                          1. P
                            Pawankumar
                            Jul 1, 2017 at 10:38 am
                            Indian army rae Kama ha
                            Reply
                            1. M
                              manoranjan das
                              Jul 1, 2017 at 10:26 am
                              Aagar 7cpc rccommondation lagu kiya to 18 mahina kyun deli kiya aur 18 mahina ka HRA sarkar kha liya.
                              Reply
                              1. S
                                Sk
                                Jul 1, 2017 at 8:17 am
                                Jab pay commission ki allowance report hi lagu karna th to eoc banakar 18 mahine kam samay kyu liya allowance ke naam par employee ko kitna wait karaya aur vahi report lagu kar di gaie e basic change nhi kiya ulta jo allowance jaise hra 10 20 30 use kam kar diya vaHhhhhhhhhhhh Jkk Jkk Hjkkkmmkkkkkkkkkkkkkkkkkkkkkkkkkkkjhhklhhihhhjjklhhkkllllljhgghjkllggjjjhjkkkghkkkjgjkkkghjkkwjqjwjsjsjdjdjdjdkdjdjsjsjsjsjsjjdjdjdjdpdldiejrjrjrjtjtjtjgjgjgjgjgjgjgkgkgkhlhlhlhkhkhkhkhkhkgkgkgkfkfkfkfkfkfkfkfkgkgkfkdjshwhwjwurhdjdjdjdjdjdjdjdjdjdjdjdjdjdjdjdjdjdjdjdjdjjdjdjdjdjdjdjdjdjdjdjdjdjdjrjeurururururjrururiruriririirirudjdjfidodooeudiosirjrjfiriieidiifididididididididididifirieidieieieidisieiwiwieieieieieueurjdueysyeydudhdhdudududueudueuehehdhrhfudurjrjdheyeyehejuwiwkwkekdkdkdjdjdjrjriroepeoeirjrjrjfjfjfjfjfkrkfkfkfktkfjfjtjtjtjrkdkjdjdhdhaushdjdkdkdjrjrjrrjhdheyegehehehehehdhdhehdhdhdhehehehrhfhdhdhrhehrhrhrueueuejrhrhrhdyryrhuririgirurutututjtugjgieueywhdhdhrufi jgjdjsjwhehrudusjejjdjjjkj
                                Reply
                                1. P
                                  P d amarnath
                                  Jul 1, 2017 at 7:43 am
                                  A fair report in the net after a deluge of biased,half-baked and false reports by ignorant reporters . Thank you.
                                  Reply
                                  1. r
                                    rmn_goutamm
                                    Jul 1, 2017 at 6:31 am
                                    Where about the arrear of the HRA.. Has not the Government deprived the Central government employees ? They have stolen about 44 thousand crore of employee's money, by giving bribe to the union leaders. Hon'ble PM may consider the arrear amount effect from 01.01.2016 to 01.07.2017 but the Finance Minister and Prime Minister jointly exploited the Central government employees. Are they not stealing the dues of the employees? Shame! Shame!
                                    Reply
                                    1. M
                                      manimaran
                                      Jul 1, 2017 at 11:28 am
                                      well said bro.
                                      Reply
                                      1. T
                                        Tn Ramakrishnan
                                        Jul 2, 2017 at 5:11 am
                                        We cannot allow 1 crore people eat 124 crore peoples money,this is applicable to politicians and higher level bureaucrats,so live and let others also live in this country.
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