Saturday, April 15, 2017

7th Pay Commission report: Big changes expected from Ashok Lavasa panel recommendations

With the Ashok Lavasa committee set to recommend changes in allowances under the seventh pay commission, the salaries of central government employees will be witnessing major changes. Apart from abolishing or subsuming various allowances, the committee is most significantly revising the rates of House Rent Allowances (HRA), which a fixed amount paid to the employees for their accommodation needs.

While the HRA is a crucial part of the salaries of government employees, it currently constitutes 30 % of the salries of employees working in metro areas. In the revised rates, the committee will be reducing the HRA to 24% in the metros. The seventh pay commission has further mentioned that the HRA will be extended as per the type of the city where the employee is living in. The cities across the country have been classified into three classes, X, Y and Z.

The cities under class X are Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, Pune and under class Y comes Agra, Ajmer, Aligarh, Allahabad, Amravati, Amritsar, Asansol, Aurangabad, Bareilly, Belgaum, Bhavnagar, Bhiwandi, Bhopal, Bhubaneswar, Bikaner, Bokaro Steel City, Chandigarh, Coimbatore, Cuttack, Dehradun, Dhanbad, Durg-Bhilai Nagar, Durgapur, Erode, Faridabad, Firozabad, Ghaziabad, Gorakhpur, Gulbarga, Guntur, Gurgaon, Guwahati, Gwalior, Hubli-Dharwad, Indore, Jabalpur, Jaipur, Jalandhar, Jammu, Jamnagar, Jamshedpur, Jhansi, Jodhpur, Kannur, Kanpur, Kakinada, Kochi, Kottayam, Kolhapur, Kollam, Kota, Kozhikode, Kurnool, Lucknow, Ludhiana, Madurai, Malappuram, Malegaon, Mangalore, Meerut, Moradabad, Mysore, Nagpur, Nashik, Nellore, Noida, Patna, Pondicherry, Raipur, Rajkot, Rajahmundry, Ranchi, Rourkela, Salem, Sangli, Siliguri, Solapur, Srinagar, Surat, Thiruvananthapuram, Palakkad, Thrissur, Tiruchirappalli, Tiruppur, Ujjain, Vadodara, Varanasi, Vasai-Virar City, Vijayawada, Visakhapatnam, Warangal. While all other cities in all states and union territories fall under class Z.

While, as per the Ashok Lavasa committee recomendation, the HRA rates will be fixed on the basis of the living costs in different cities, the committee is also planning to set the rates on the basis of the Dearness Allowance (DA) paid to the employees. As reported by, it stated that if the DA to an employee crosses 50% the HRA rates will be 27 per cent, 18 percent and 9 per cent. And if the DA rate crosses 100 % the HRA rates will be 30 per cent, 20 per cent and 10 per cent.

The Ashok Lavasa committee is expected to present the final report on the revised rates on April 18.

The Financial Express

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