Allowances hike announcement likely after April 12

Revised allowances including house rent allowance (HRA) will likely be announced for the central government staff after the ongoing Budget session of Parliament is over on April 12. The finance secretary-led panel, which is giving final touches to the reworked allowances based on the 7th pay panel’s recommendations, will hold its final meeting shortly, sources told FE. The panel met for over three hours on Wednesday to deliberate on the subject. “Decisions are broadly taken on allowances pending a final review. But these will be announced only after current Budget session ends on April 12 to avoid any controversy,” another source said. In the case of the employees in metro cities, the panel was considering to make HRA a little more generous than the CPC’s award. Taking note of employees’ representations, the finance secretary-led panel was looking at HRA of 30% of basic pay for those in cities with a population of over 5 million, against 24% recommended by CPC. In the Sixth CPC award period (2006-2015), HRA was 30% for these cities. HRA accounts for about 60% of the total allowances bill.

The secretaries’ panel is reviewing the commission’s recommendations pertaining to allowances including rationalisation of some 196 existing benefits. The pay panel has suggested the abolition of 52 benefits and merger of 36 with existing ones to end their separate identities. The financial implication of revised allowances would be broadly in line with the CPC’s estimate of around R29,300 crore (including for the railways) in the first year. While the revised pay and pension was implemented from January 1, 2016, allowances will be implemented prospectively. The delayed implementation of allowances have saved the government nearly R33,000 crore in 15 months.