7th Pay Commission: Cabinet approves hike in allowances, HRA for central govt employees

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New Delhi: The Union cabinet raised several allowances, including that for house rent, for a majority of the 4.7 million government employees, by more than what the seventh pay panel had suggested last year.

The modified allowances will be effective from 1 July and cost the Union government an additional Rs. 1,448.23 crore a year.

The combined financial implication on account of these allowances will now be Rs 30,748.23 crore, finance minister Arun Jaitley told reporters after the cabinet meeting on Wednesday, more than the Rs. 29,300 crore figure estimated by the seventh pay commission.

A cabinet statement said the government had also decided not to abolish 12 of the 53 allowances as recommended by the 7th Pay Commission.

The decision to retain these allowances has been taken keeping in view the specific functional requirements in sectors like the Railways, Posts, space and atomic energy. It was also decided that three of the 37 allowances recommended to be subsumed into other allowances will be retained separately. The government said this move will benefit about 100,000 employees.

HRA revisions

On house rent allowances (HRA), the cabinet decided to set a minimum HRA floor price for employees working in three different category of cities – with a population of 5 million and above (X), 500,000 to 5 million (Y) and below 500,000 (Z).

Effectively, HRA from 1 July will be a minimum of Rs. 5,400, Rs. 3,600 and Rs 1,800 for employees working in X/Y/Z category cities, respectively. This will benefit more than 750,000 employees.

HRA is currently paid at 30% for X, 20% for Y and 10% for Z category of cities. The pay commission had recommended a reduction in the existing rates to 24% for X, 16% for Y and 8% for Z category of cities.

The union cabinet also decided to enhance HRA to 27%, 18% and 9%, respectively when the dearness allowance crosses 25%. When dearness allowance crosses 50%, it will be increased to 30%, 20% and 10%, respectively for the three categories of cities. This is more than what the pay panel recommended.

This will benefit all employees who are eligible for HRA.

The cabinet also enhanced Siachen allowance paid to soldiers deployed there from the existing rate of Rs 14,000 to Rs 30,000 per month for jawans and junior commissioned officers, and from Rs. 21,000 to Rs. 42,500 per month for officers. It will benefit all soldiers and officers of Indian Army who are posted in Siachen, the cabinet statement said.

Besides, the rate of children education allowance has been increased from Rs. 1,500 per month per child to Rs. 2,250 per month. Similarly hostel subsidy for central government employees’ children will also go up from Rs.4,500 per month to Rs.6,750 per month. And existing rates of special allowance for Child Care for Women with Disabilities has been doubled from Rs. 1,500 per month to Rs 3,000 per month.