The Narendra Modi government is expected to soon announce a maximum HRA hike of up to 178 percent after getting Lavasa panel report on allowances.
New Delhi: The Narendra Modi government is expected to soon announce a maximum HRA hike of up to 178 percent after getting Lavasa panel report on allowances.
A high-level committee headed by the Finance Secretary Ashok Lavasa on Thursday submitted its report on allowances to Finance Minister Arun Jaitley.
The report will now be examined by the empowered committee of secretaries and following that it will be placed before the Cabinet.
The committee’s proposal on allowances will benefit over 47 lakh central government employees and 53 lakh pensioners. The allowances form a sizeable amount of the salary drawn by a government employee.
The Ashok Lavasa Committee was constituted in June last year after the government implemented the recommendations of the 7th Pay Commission.
The committee on allowances was asked to review the recommendations of the Seventh Pay Commission, specially on reducing the house rent allowance (HRA) to 24 percent of basic pay as against the 30 percent of basic pay employees were drawing under the Sixth Pay Commission.
The committee was also asked to examine the 7th Pay Commission recommendation for abolition of 53 allowances out of a total of 196 and subsuming another 36 into larger existing ones.
The 7th Pay Commission headed by AK Mathur had earlier proposed the rate of House Rent Allowance (HRA) at 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively.
The Commission had also recommended that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.
The existing rates of HRA for Class X, Y and Z cities and towns are 30 percent, 20 percent and 10 percent of Basic pay (pay in the pay band plus grade pay).
|Population of City||DA above|
|Above 50 lakh (Class X)||30%||24%||27%||30%|
|5 lakh to 50 lakh (Class Y)||20%||16%||18%||20%|
|Below 5 lakh (Class Z)||10%||8%||9%||10%|
If the Lavasa panel retains the exiting HRA rates (as per 6th Pay Commission) then the HRA component of central government employees will increase ranging between 157 percent and 178 percent.
Take, for instance, a central government employee at the very bottom of the pay scale under 6th Pay Commission was till now entitled to an HRA of Rs 2,100 on basic pay of Rs 7,000 (basic pay that includes pay of pay band + grade pay) in a Class X city. It is to be noted that government, while implementing the 7th Pay Commission in June last year had made it clear that till the final outcome of allowances committee is being placed, the employees would be getting the allowances as per 6th Pay Commission.
Now, as per 7th Pay Commission, the new entry level pay at this level is Rs 18,000 per month against which the new HRA for a Class X city would be Rs 5,400 per month, that is around 157 percent more than the existing level.
|Existing Basic Pay (6th CPC)||HRA (6th CPC)||Proposed Entry Pay as per 7th CPC||Proposed HRA as per 7th CPC|
|Class X||Class Y||Class Z||Class X||Class Y||Class Z|
Similarly, at the highest level of the pay scale, the Cabinet Secretary and officers of the same rank have a basic pay of Rs 90,000, which means they are entitled to current HRA of Rs 27,000 in Class X towns. After the revised pay scale, the new basic pay is Rs 2.5 lakh, for which the HRA would be Rs 75,000, meaning a hike of around 178 percent.