7th Pay Commission: Allowance committee to take more time to submit final report

As soon as the central employees thought the wait for higher allowance is over, the allowance committee on Wednesday said that they will take some more time.

The allowance committee under 7th Pay Commission is likely to take four to five more days to submit its final report to Finance Minister Arun Jaitley, as reported by NDTV quoting a top employee of union official. 

ALSO READ: 7th Pay Commission: Allowance committee to submit final report this week

Earlier, as per various media reports, the committee was expected to submit the report by this week after the "crucial" meeting held on April 6. However, the committee has now asked for some more time to finalise the report. 

In June last year, after the implementation of 7th Pay Commission, Finance Minister Arun Jaitley had announced the formation of Lavasa panel, to examine the suggestions on allowance. 

Apart from allowances, the panel will also give suggestions on House Rent Allowances to the government. Under the 7th Pay Commission, HRA should be paid at the rate of 24%, 16% and 8% of the new Basic Pay, depending on the type of cities.  

Employees' unions demanded HRA at 30, 20 and 10%. 

ALSO READ: 7th Pay Commission: Allowance committee to hold "crucial" meeting today

In the last meeting, National Joint Council of Action (NJCA) representives were also part of it. NJCA is a joint body of unions representing central government employees.

Before that, on March 28, the Lavasa Panel had said they will finalise the report after receiving comments from ministries on treatment of 14 allowances and benefits. The panel had sought comments from ministries of defence, railways and posts on treatment of over a dozen benefits.

Other recommendations that included a change in the present system of accounting, wherein pay and allowances are clubbed and it would be difficult to bifurcate these.

Out of 196 allowances, the 7th Pay Commission report had recommended abolition of 52 and subsuming of another 36 into larger existing ones. 

Reason for the delay?

One of the reason could be the recent comment by the Reserve Bank of India on how 7th Pay Commission will impact the inflation. On April 7, the RBI Governor, Urjit Patel had said the implementation of the allowances will create "prominent risk on inflation."

"In case the increase in house rent allowance as recommended by the 7th CPC is awarded, it will push up the baseline trajectory by an estimated 100-150 basis points over a period of 12-18 months, with this initial statistical impact on the CPI followed up by second-order effects," RBI had said. 

ALSO READ: 7th Pay Commission: RBI flags concern over inflation; what will allowances committee do?

The central bank has been raising its concern over the impact on inflation due to the implementation of 7th Pay Commission, from quite some time. Now, the question arise is what will Lavasa panel do?