The special committee on allowances recommended by the 7th Pay Commission is expected to recommend more than double House Rent Allowance (HRA). The committee on allowances recommended by the 7th Pay Commission is likely to propose a increases ranging between 106 per cent and 122 per cent in HRA for all categories of employees. The government is expected to start giving HRA by October this year including all allowances. The hike of 120 per cent in HRA allowance could bring cheer to millions of central government employees and pensioners.
The government while issuing the notification for the implementation of the 7th Pay Commission had announced to set up a special committee to examine the recommendations on allowances. The 7th pay commission had recommended abolition of 51 allowances and subsuming 37 others out of 196 allowances. The allowances had been a major bone of contention amongst majority of the central government employees. According to a report of Sen Times, the committee, headed by Finance Secretary Ashok Lavasa, on allowances would not propose any change and stick with the 7th Pay Commission’s recommendations on allowances.
The 7th Pay Commission recommended the rates at which HRA is to be paid to 24 per cent, 16 per cent and 8 per cent respectively for Class X, Y and Z cities and towns respectively of new Basic pay (pay in the pay band plus grade pay multiplying by the fitment factor of 2.57). The existing rates of HRA for these cities and towns were 30 per cent, 20 per cent and 10 per cent of Basic pay (pay in the pay band plus grade pay) respectively. The question here arises how the HRA allowance rises when the HRA rates have actually reduced?
Indeed, the HRA is calculated on basic pay alone. While basic pay will go up more than two-and-a-half times. Thus even getting a smaller fraction of the much higher new basic pay as HRA yields well over the current levels of the allowance, said the report. The 7th Pay Commission recommended that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent respectively when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.
The 7th Pay Commission notification confirmed that central government employees will get 14.27 per cent hike in basic pay at junior levels, which is the lowest in 70 years. The Cabinet also approved the increase in minimum pay Rs 18,000 from existing Rs 7,000.