7th Pay Commission: Latest Developments On Allowances, HRA

The government had last year accepted the recommendation of Justice AK Mathur-headed Seventh Pay Commission in respect of the hike in basic pay and pension.

Nearly 50 lakh central government employees could get revised allowances under 7th pay commission award, including HRA or house rent allowance, from next month, Financial Express in a report said last week. The report, citing sources, said that the Cabinet may take up the proposal of 7th pay commission allowances later this month. The Ashok Lavasa committee, which examined the 7th pay commission's recommendations on allowances, submitted its report to the finance minister on April 27. An Empowered Committee of Secretaries was set up screen the report and firm up proposals for the Cabinet.

The Lavasa committee suggested some modifications in some allowances that are applicable universally to all employees as well as certain other allowances which apply to specific employee categories, the finance ministry had said in a statement. Economists say that 7th pay commission allowances are expected to give a further boost to consumer spending and thus the broader economy, analysts say.

The Reserve Bank has however flagged upside risks to inflation from disbursement of revised 7th pay commission allowances. "At the current juncture, global political and financial risks materialising into imported inflation and the disbursement of allowances under the 7th central pay commission's award are upside risks. The date of implementation of the latter is still not announced and as such, it is not factored into the baseline projections," the RBI said in its latest monetary policy statement last week.

The government had last year accepted the recommendation of Justice AK Mathur-headed Seventh Pay Commission in respect of the hike in basic pay and pension. The 7th Pay Commission's recommendations relating to allowances were referred to the Ashok Lavasa committee.