A high-level committee headed by finance secretary Ashok Lavasa submitted its report on allowances to 47 lakh central government employees.
The Ashok Lavasa committee was constituted in June 2016 after the government implemented the recommendations of the 7th Pay Commission.
The Pay Commission had recommended abolition of, or subsuming of, allowances like acting, assisting cashier, cycle, condiment, flying squad, haircutting, rajbhasha, rajdhani, robe, shoe, shorthand, soap, spectacle, uniform, vigilance and washing.
The committee has taken into account representations made by various stakeholders. The report will now be examined by the empowered committee of secretaries and following that it will be placed before the Cabinet.
Out of total 196 allowances, it had recommended abolition of 52 and subsuming of another 36 into larger existing ones. The Pay Commission had recommended hiking the HRA in the range of 8-24%.
If the 7th Pay Commission recommendations on allowances are implemented fully, then as per estimates the cost to the exchequer will be Rs29,300 crore.
The Lavasa committee has recommended that the existing rates for the House Rent allowance be changed both upon the city of residence as well the rates of DA. According to this provision, the Lavasa Committee has proposed that the HRA under the seventh pay commission be revised to a rate of 24 per cent, 16 per cent and 8 per cent of the current basic pay, depending on whether the employee is residing in an X, Y or Z class city. All cities have been categorised based on their total population.
Further, wherever the Dearness Allowance crosses 50 percent, the committee has recommended that the HRA be given at a rate of 27 per cent, 18 per cent and 9 per cent. In cases where the DA crosses 100 percent, the proposed rates for the HRA are 30 per cent, 20 per cent and 10 per cent.
According to estimates, it has been projected that merely based on the revision in the House Rent Allowance (HRA), salaries of all central government employees will go up by a minimum of 106 percent and a maximum of 122 percent.
For instance, for an employee in the apex grade pay, the basic pay of Rs 2.5 supplemented by an HRA of Rs 60,000. This would entail a 122 percent upscale from the rates under the previous basic pay of Rs 80,000.