7th Pay Commission: Allowances bonanza for govt staff from 1 July explained in 20 points

The cabinet on Wednesday approved raising allowances of government employees and pensioners, a move that is expected to boost consumer demand but strain public finances.

The one-off increase, to be effective from 1 July, is estimated to cost the federal exchequer 307.4 billion rupees ($4.76 billion) per annum, Finance Minister Arun Jaitley told reporters after the cabinet meeting.

While higher allowances will benefit millions of public sector workers, they are expected to fuel demand-driven price pressures, posing an upside risk to the Reserve Bank of India's inflation projections.

Here are the key facts to know about development:



1) House rent allowance will be paid at 24, 16 and eight per cent for X, Y and Z categories of cities, respectively.

2) HRA will not be less than Rs 5,400, Rs 3,600 and Rs 1,800 for X, Y, and Z categories of cities, respectively, calculated at 30, 20 and 10 per cent of minimum pay of Rs 18,000.

3) The Pay Commission recommended revision of HRA when DA reaches 50 percent and 100 percent. The government decided to revise rates when DA crosses 25 per cent and 50 per cent, respectively.

4) Siachen Hardship Allowance increased to Rs 42,500 per month.

5) For JCOs and Other Ranks, the hardship allowance for Siachen will be Rs 30,000 compared to the 7th Pay Commission's recommendation of Rs 21,000. The JCOs and ORs were getting Rs 14,000 per month as hardship allowance for Siachen at present.

6) For the defence personnel in peace areas, Ration Money Allowance will now be given in "cash" and it will be directly transferred to their bank accounts.

7) Allowances like washing, uniform, kit maintenance, outfit have been rationalised and subsumed in the newly-proposed dress allowance to be paid annually in four slabs Rs 5000, Rs 10,000, Rs 15,000 and Rs 20,000 per annum for various categories of employees.

8) Rate of Children Education Allowance has been increased from Rs 1,500 per month per child (maximum 2) to Rs 2,250. Hostel Subsidy will also go up from Rs 4,500 to Rs 6,750 per month.

9) Existing rates of Special Allowance for Child Care for Women with Disabilities has been doubled from Rs 1,500 to Rs 3,000 per month.

10) Higher Qualification Incentive for Civilians has been increased from Rs 2,000 and Rs 10,000 (grant) to Rs 10,000 and Rs 30,000 (grant).

11) Technical allowance of Rs 3,000 to Rs 4,500 per month being paid to defence personnel belonging to technical branches has been merged with Higher Qualification Incentive.

12) The facility of one additional free railway warrant (Leave Travel Concession) presently granted to personnel of defence forces serving in field/ high altitude/ counter-insurency shall also be extended to all personnel of Central Armed Personnel Forces (CAPFs) and the Indian Coast Guard.

13) Rates of high altitude allowance granted to defence forces and CAPF personnel will go up from Rs 810 and Rs 16,800 per month to Rs 2,700 and Rs 25,000 per month, respectively.

15) The rates of field area allowances will go up from Rs 1,200 to Rs 12,600 per month to Rs 6,000 to Rs 16,900 per month, respectively. Classification of field areas for this allowance will be done by the Ministry of Defence for defence personnel and by Ministry of Home Affairs for CAPFs.

16) The rates of Counter-Insurgency Operations Allowance granted to defence and CAPFs will go up from Rs 3,000 and Rs 11,700 per month to Rs 6,000 and Rs 16, 900 per month, respectively.

17) The rates of MARCOS and Chariot allowances granted to marine commandos of the Indian Navy will go up from Rs 10,500 and Rs 15,750 per month to Rs 17,300 and Rs 25,000 per month, respectively.

18) The 12-hour conditionality for determining the eligibility of Sea Going Allowance granted to the Indian Navy has been reduced to four hours. The rates will go up from Rs 3,000 and Rs 7,800 per month to Rs 6,000 and Rs 10,500 per month, respectively.

19) The rates of Commando Battalion for Resolute Action (COBRA) Allowance granted to Central Reserve Police Force personnel deployed in Maoist-hit areas will go up from Rs 8,400 and Rs 16,800 per month to Rs 17,300 and Rs 25,000 per month, respectively.

20) Special Incident/ Investigation/ Security Allowance has been rationalised. The rates for Special Protection Group (SPG) have been revised to 55 per cent and 27.5 per cent of basic pay for operational and non-operational duties, respectively.

With inputs from Reuters, IANS

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Updated Date: Jun 29, 2017 09:22:25 IST

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