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The long-drawn suspense over update on allowances continues for now as the Union Cabinet did not take up the matter in its meeting yesterday. Central government employees' allowance structure was not part of the agenda for the meeting where a final decision on allowances was expected to be reached.
The topic of allowances for central government employees is now expected to be included in next Cabinet meeting's agenda. The approval for new allowance rates has been long overdue despite Prime Minister Narendra Modi's instruction to pick up the pace in this direction.
Central government employees have been waiting for federal government to approve the reformed allowance structure under the 7th Central Pay Commission since. The pay panel recommendations related to pay, pension and related issues had already been approved by the Cabinet in June last year. Meanwhile, allowances are being paid at old rates mandated by the 6th Pay Commission.
The Cabinet had retained the percentage-based pension regime on recommendations from Ministry of Defence and revised the three pay matrices for defence forces. The Cabinet also approved modifications in methods for revision of pre-2016 pensioners and family pensioners. The modified pensions alone put a burden of Rs 1.76 lakh crores on the Central Government.
The 7th Central Pay Commission had suggested radical changes in the allowance structure - demanding that 52 allowances are scrapped and 36 other are subsumed with other allowances. The Cabinet had formed a Committee of Allowances under Finance Secretary Ashok Lavasa to screen the recommendations.
The Lavasa Committee submitted its review report this year on April 27 to Finance Minister Arun Jaitey after factoring in representations from government department and agencies like the defence forces, railway staff, medical professionals, etc. The report was then taken up by the Department of Expenditure for examination, following which it was passed on to Empowered Committee of Secretaries (E-CoS) set up to screen the 7th CPC recommendations and to firm up the proposal for approval of the Cabinet.
Reports suggest that the E-CoS report has already been submitted to the Finance Minister for his consideration and to be tabled before the Cabinet.
With allowance structure under the 7th Pay Commission, the Cabinet is expected to look into House Rent Allowance rates among other allowances, payment of arrears against revised allowance structures and hike in basic pay.
The HRA rates have been capped between 25 per cent and 27 per cent the Empowered Committee, something which can be changed by the Cabinet, if it intends to. Central government employees are demanding HRA rates to be pegged at 30 per cent, 20 per cent and 10 per cent for Class X,Y and Z cities respectively.
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