Thursday, August 11, 2022
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7th Pay Commission: Inflation demands more HRA

New Delhi: House rent allowance or HRA is a core component of central government employees’ salary. It is given to every central government employee towards meeting the cost of renting of house in the city of work.

Finance Minister Arun Jaitley said, Whatever the committee on allowances decides, it will go to the Cabinet.”
Finance Minister Arun Jaitley said, “Whatever the committee on allowances decides, it will go to the Cabinet.”

But the present rate of house rent allowance — of 30, 20 and 10 per cent — has been reduced to 24, 16 and 8 per cent respectively by the by the 7th Pay Commission.

The Commission also recommended, that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent respectively when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.

The central government employees’ unions leader said that the proposed house rent is not enough for employees to make a living in cities. They had demanded a hike in House rent allowance 30, 20 and 10 per cent respectively according to new pay matrix. They urged government to hlke the new HRA keeping in mind the House Rent prices prevalent in the market.

The increase in house rent allowances does contribute to inflation. The food inflation constitutes a major chunk of our inflation, when food inflation is moderating, any increase in other factors will get absorbed reasonably, said the Economic Affairs Secretary Shaktikanta Das.

However, The Reserve Bank of India (RBI) expects implementation of the recommendation regarding house rent allowance by the 7th Pay Commission could have an impact on retail inflation.

The sources in the Finance Ministry said that the quantum of House Rent and others allowances may not vary from those proposed by the 7th Pay Commission.

“The committee on allowances headed by Finance Secretary Ashok Lavasa is likely to stick with the 7th Pay Commission’s recommendations on allowances and the government is likely to accept it.” the sources added.

The 7th Pay Commission has recommended abolition of 51 allowances, and subsuming 37 others after examining 196 allowances.

The government has already accepted most of the 7th Pay Commission’s recommendations on advances, with the changes have been put in the office memorandums on October 7.

The abolished advances include bicycle advance, warm clothing advance, advance of pay on transfer, festival advance, natural calamity advance, advance of leave salary and advance for law suits, while interest-free advances that have been retained are medical treatment, travelling allowance (TA) for family of deceased, TA on tour or transfer and Leave Travel Concession (LTC) overriding the 7th Pay Commission’s recommendation.

The interest bearing advances relating to motor car advance and motorcycle/scooter/moped advance has been discontinued and computer advance has been enhanced to Rs. 50,000 as proposed by the 7th Pay Commission.

TST

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