Mumbai, July 7: The Finance Ministry on Thursday notified the list of recommendations of the Seventh Pay Commission, along with 34 modifications that were approved by the Cabinet in a meeting held on June 28, 2017. The increased allowances will come into effect from July 1, 2017 and will cost the exchequer a total sum of Rs 30,748 crore per annum.
The modifications alone are expected to cost the exchequer an additional Rs 1,448 crore, as against Rs 29,300 crore, that would have been the cost of allowances earlier, had the Cabinet accepted the Panel recommendations as is. The Commission had recommended the abolition of 53 out of the total 190 allowances that were present earlier.
In the revised allowance structure, the government decided to do away with 41 out of the 53 and kept the rest of the 12 allowances, stating that these will benefit the central government employees. There were specific modifications regarding the allowances of people in Defense, Railways, science and research departments and other central government employees.
“Ministries concerned have now been advised to issue their orders on allowances governed by them immediately so that the revised allowances get reflected in the current month’s salary of government employees”, said a statement from the Finance Ministry, that was also published in the Gazette of India on Thursday. The House Rent Allowance (HRA) that is currently given at the rate of 10 per cent, 20 per cent and 30 per cent pf the basic pay (for residents of X,Y and Z category cities, respectively) was revised to 24 per cent, 18 per cent and 6 per cent of the basic pay.
However, the Cabinet, in order to ensure that people in the lower salary brackets get enough, fixed a floor for the allowances, saying that it shouldn’t be lower than Rs 5,400, Rs 3,600 and Rs 1,800 for residents of X, Y and Z category cities. This floor has been decided according to the earlier rates of 30, 20 and 10 per cent of the minimum pay of Rs 18000. These rates are to be revised when the Dearness Allowance (DA) crosses 25 per cent.
