Thursday, June 30, 2016

HRA in 7th pay commission after cabinet approval: Existing Rate or Amount


The Pay commission has recommended HRA should be rationalized by using the factor 0.8 which is used for rationalising the percentage based allowances. The 7th CPC recommended 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively. The Commission 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 [ See the 7th CPC recommendation on HRA ]The cabinet committee reviewed the recommendations on Allowances and they are not able to give a decision over the Allowances. Hence the Union Cabinet  decided to constitute a Committee headed by Finance Secretary for further examination of the recommendations of 7th CPC on Allowances. And it is said that the Committee will complete its work in a time bound manner and submit its reports within a period of 4 months.

In the press release issued by government said the following” The Commission examined a total of 196 existing Allowances and, by way of rationalization, recommended abolition of 51 Allowances and subsuming of 37 Allowances. Given the significant changes in the existing provisions for Allowances which may have wide ranging implications, the Cabinet decided to constitute a Committee headed by Finance Secretary for further examination of the recommendations of 7th CPC on Allowances. The Committee will complete its work in a time bound manner and submit its reports within a period of 4 months. Till a final decision, all existing Allowances will continue to be paid at the existing rates.”
The above press release  concluded with a statement ” Till a final decision, all existing Allowances will continue to be paid at the existing rates” [Courtesy GServant]Since the House Rent Allowance also listed among one of these 196 Allowances, the status HRA will clear after Finance Ministry's Order. Now the situation may be divided in two possibilities:-
First Possibility: HRA at existing Rate of 30%, 20% and 10% for class X, Y and Z respectively. It is clear that recommendations of 7th CPC has reduced the existing rate of HRA with linking it increase in Dearness Allowance.  HRA at existing rate in new pay structure will give 157% increase in comparison to pre revised HRA vis-a-vis 4% increase in recommended HRA,  Therefore, least possibility to get the HRA at existing rate in new pay structure and it is also complicate to calculate HRA only at existing rate on pre revised basic pay.
Second Possibility: Fixed HRA amount equal to last drawn in pre-revised pay structure. The second possibility will reduce the increase in present HRA and the arrears of HRA may be drawn after proposed committee' recommendations.  Thus govt and employees will avoid any recovery in HRA after committee's recommendations.
Whether these existing rates of HRA will be paid based on revised pay or fixed amount of pre revised pay..? It needs to be clarified when implementation of 7th pay commission is in process.




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