But may be effective from April 1, Budget factored 7% increase
NEW DELHI, FEBRUARY 20:  
Finally some good news for over 47 lakh Central government employees is on its way. The Centre is likely to make a formal announcement on the revised structure for allowances under the Seventh Pay Commission by next month.
“A decision is likely to be announced after the State assembly elections get over,” said a senior official. The entire exercise of State polls will get completed by March 11.
The committee on allowances led by Finance Secretary Ashok Lavasa that was set up to review the recommendations of the Seventh Pay Commission is understood to have finalised its report.
Sources indicated that the committee has recommended higher house rent allowance could be increased to offset the higher cost of living.
However, the revised structure for allowances is likely to be implemented from April 1, to ensure that it does not have any impact on the government’s finances this fiscal.
An official said the impact of the higher allowances has already been factored in the Union Budget 2017-18, which has increased the allocation for allowances (other than travel expenses) by seven per cent.
According to the Budget Estimate, allowances have been pegged at ₹69,221.7 crore in 2017-18, as against the Revised Estimate of ₹64,677.43 crore this fiscal. Travel expenses are also estimated to rise marginally to ₹4,713.93 crore next fiscal from ₹4,322.89 crore this fiscal.
Holi cheer
But despite, the delayed award, which has also been a sore point for many employees, the government is hopeful that it will not only add to the Holi cheer, but will also improve sentiments and boost consumption and growth after demonetisation of currency last November.
The Union Cabinet had on June 29 last year, approved the proposal for award of higher salaries, as recommended by the Pay Commission but had deferred the decision on allowances.
Instead, the government had set up the committee to review the recommendations of the Pay Commission on allowances.
The Pay panel had examined 196 existing allowances and had recommended abolition of 51 allowances and subsuming of 37 allowances.
(This article was published on February 20, 2017)