7th Pay Commission: Will employees hear a good news by April 2018?

The Union Cabinet had earlier examined 197 allowance, recommending abolition of 53 allowance and subsuming 37 in others.

Representational image of Rs 500 denomination currency note. Image Source: IANS

Nearly two years have passed and central government employees are still waiting for their pay scale and fitment factor hike.

However, their prays may soon be heard this year, as Union Finance Ministry has reportedly set a panel that may take a final call on demands of these employees by April this year.

It is being expected that the promises made by FM Arun Jaitley on fitment factor and pay scale to lower-level employees may also come to a reality.

Earlier reports also stated that the Gazette will have this information in the next financial year and it might be implemented from April 2018.

An official told The Sen Times newspaper, "The employees, who get salaries from pay matrix level 1 to 5 will get a salary increase with fitment factor 3.00 times instead of 2.57 times of basic pay of 6th pay commission. Accordingly, minimum pay will be hiked up to Rs 21,000."

When the 7th Pay Commission was approved by the Union Cabinet last year, the minimum basic pay was increased from Rs 7,000 to Rs 18,000 whereas the maximum pay increased to Rs 2.5 lakhs with a fitment factor of 2.57 times. However, employees were demanding that the minimum basic pay be increased to Rs 26,000 with a fitment factor of 3.68 times.

Reports say that for entry-level employees basic pay may go up to Rs 18,000 from previous Rs 7,000, while for highest level like secretary - the pay scale could rise to Rs 2.5 lakh from Rs 90,000.

Moreover, basic pay of Class 1 officers is expected to start from Rs 56,100.

Apart from this, the panel may also increase house rent allowance to 27%, 18% and 9% when dearness allowance reaches above 50%. Previously, HRA was decided to be paid at 24%, 16% and 8% for X, Y, Z cities respectively.

Earlier, the Union Cabinet had examined 197 allowance, recommending abolition of 53 allowance and subsuming 37 in others. Also, 7th CPC recommended revised rates commensurate with Dearness Allowance.

The cabinet had projected additional financial implication at Rs 29,300 crore per annum, modifications to have additional implication of Rs 1,448.23 crore.

Combined additional financial implication estimated at Rs 30,748.23 crore per annum.

It may be noted that increase in HRA allowance would come as a concern to the Reserve Bank of India (RBI) which decides monetary policy by targeting India's inflation.

RBI believes HRA will impact India Consumer Price Index (CPI) inflation - which has already seen uptick in past few months. RBI has been forced to increase its inflation target in sixth bi-monthly monetary policy as it fears HRA will impact CPI in coming months.

"The projected moderation in inflation in the second half is on account of strong favourable base effects, including unwinding of the 7th CPC’s HRA impact, and a softer food inflation forecast, given the assumption of normal monsoon and effective supply management by the government," the RBI report added.