The 7th CPC or Central Pay Commission government resolution now finds its place in the Gazette of India. The revised allowances are said to affect over 48 lakh central government employees and are said to come into effect from July 1, 2017.
The 7th CPC recommended allowances to be raised in line with the rate of inflation as reflected in dearness allowance or DA. On similar lines, fully DA-indexed allowances including travel allowance were not raised. Allowances not indexed to DA were increased by a factor of 2.5 while others that were partially indexed to DA got a raise by a factor of 0.8.
House Rent allowance or HRA in accordance with the recommendations of the 7th CPC were rationalized by a factor of 0.8. As against suggested by 7th CPC, HRA for X, Y and Z city categories that is classified based on the population, the minimum HRA has been fixed at Rs. 5400, Rs. 3600 and Rs. 1800 respectively. The floor rate has been calculated based on a rate of 30%, 20% and 10% of the minimum pay of Rs. 18000. The HRA benefit will increase payout of over 7.5 lakh employees across levels from 1 to 3.
The recommendation of the 7th CPC also puts forth that HRA be increased upwards to 27%, 18% and 9% in two phases when dearness allowance exceeds 50% and in the other instance when DA crosses 100% to 30%, 20% and 10% . But the government has decided that the HRA shall be revised at an earlier instance i.e when DA crosses the limit of 25% and 50% respectively. The move will be beneficial for all employees not residing in government quarters and getting HRA.
The approved modifications with respect to allowances shall result in an increase of Rs 1448.23 crore annually in comparison to the projections figure arrived at by the 7th CPC.