The Union Cabinet Approved the Recommendations of the 7th CPC on Allowances

Come into effect from 1st July, 2017. Affect more than 48 lakh central government employees. Cabinet had set up the Committee on Allowances (CoA) . Modifications are based on suggestions made by the CoA.

7Th Pay Commission

7th CPC recommendations on Allowances

  • CPC Examined 197 allowances- Need for continuation, appropriateness, and rationalization.
  • 53 allowances abolished
  • 37 subsumed

Raises

  • Raised commensurate with inflation as reflected in the rates of Dearness Allowance (DA) .
  • DA-indexed allowances such as Transport Allowance not given any raise
  • Allowances not indexed to DA raised by 2.25
  • Partially indexed by factor of 1.5.
  • Quantum of allowances as a percentage of pay rationalized by a factor of 0.8.

New table called the Risk and Hardship Matrix (R&H Matrix)

  • Nine cells denoting degrees of risk and hardship
  • Extra cell at the top named as RH - Max includes Siachen Allowance.
  • Multiple rates replaced by two slab rates for every cell of the R&H Matrix.

Financial Implications

  • Combined additional financial implication estimated at ₹ 30748.23 crore per annum.

House Rent Allowance

Current:

  • 30% for X (population of 50 lakh & above)
  • 20% for Y (5 to 50 lakh)
  • 10% for Z (below 5 lakh)

New:

  • 24% for X
  • 16% for Y
  • 8% for Z
Image shows the House Rent Allowance

HRA shall not be less than ₹ 5400, ₹ 3600, and ₹ 1800 for X, Y and Z category of cities calculated@30% , 20% and 10% of the minimum pay of ₹ 18000

Siachen Allowance

  • Placed Siachen Allowance in the RH-Max cell of the R&H Matrix.
  • Enhance the rates of Siachen Allowance to ₹ 30,000 per month for Jawans & JCOs (Level 8 and below) and ₹ 42,500 per month for Officers (Level 9 and above) .

Tough Location Allowance

Based on geographical location such as Special Compensatory (Remote Locality) Allowance (SCRLA) , Sunderban Allowance & Tribal Area Allowance subsumed in Tough Location Allowance.

  • Areas under TLA classified into three categories
  • Rates governed per different cells of R&H Matrix
  • Range of ₹ 1000 - ₹ 5300 per month

About Pay Commission

Set up intermittently

Recommends changes in salary structure GoI employees

  • The pay commission is an administrative system⟋mechanism that the government of India set up in 1956 to determine the salaries of government employees.
  • Since lndia՚s independence, seven pay commissions have been set up on a regular basis to review and make recommendations on the work and pay structure of all civil and military divisions of the government of India.
  • Headquartered in Delhi, the commission is given 18 months from the date of its constitution to make its recommendations.

First Pay Commission:

  • The first pay commission was established on January, 1946 and was submitted to interim government of India.
  • Headed by Srinivasa Varadachariar.

Second Pay Commission:

  • The second pay commission was set up in August 1957,10 years after independence.
  • The second pay commission had a financial impact of ₹ 396 million.
  • Chairman of the commission was Jagannath Das.

Third Pay Commission:

  • The third pay commission set up in April 1970.
  • The cost of the proposals was 1.44 billion
  • Chairman was Raghubir Dayal.
  • The third pay commission (3Cm) added three very important concepts of Inclusiveness, Comprehensibility, an adequacy for pay structure to be sound in nature.

Fourth Pay Commission:

  • Constituted in June 1983.
  • The financial burden on government was 12.82 billion.
  • Chairman of fourth pay commission was P. N. Singhal.

Fifth Pay Commission:

  • Setting up the Fifth pay Commission was issued on 9 April 1994 but started functioning only on 2 May 1994.
  • Chairman of Fifth pay commission was Justice S. Ratnavel Pandian.

Sixth Pay Commission:

  • In July 2006, the cabinet approved setting up of the sixth pay commission.
  • Chairman was Justice B. N. Sri Krishna.
  • Focus mainly on removing ambiguity in respect of various pay scales and to bring the idea of pay bands.

Justice A. K Mathur headed the Seventh Pay Commission

Table contain shows the Justice A. K Mathur headed the Seventh Pay Commission
NameDesignationRole in Commission
Ashok Kumar MathurRetired Judge, Supreme Court and Retired Chairman, Armed Forces TribunalChairman
Vivek RaeRetd. Secretary, Ministry of Petroleum and Natural GasMember (Full Time)
Dr. Rathin RoyDirector, NIPFPMember (Part Time)
Meena AgarwalOSD, Department of Expenditure, Ministry of FinanceSecretary

Examrace Team at Jul 31, 2017