Allowances Committee Report on 7th Pay Commission recommendations released by Finance Ministry
Allowances Committee Report on 7th Pay Commission recommendations released by Finance Ministry – Government Resolution
Allowances Committee Report on 7th Pay Commission recommendations released by Finance Ministry – Cabinet approval
Chapter 1
Background
1.1 The proposals relating to the implementation of the Seventh Central Pay Commission (7th CPC) recommendations on pay, pensions, allowances and other related issues were placed before the Cabinet in its meeting held on 29.06.2016 for approval. The Resolution conveying the approval of the Cabinet was published in the Gazette of India on 25.07.2016.
1.2 On allowances, it was decided that in view of substantial changes in the existing provisions and the number of representations received in this regard, the recommendations on Allowances (except Dearness Allowance) may be referred to a Committee comprising of Secretary, Expenditure as Chairman and Secretaries of Home Affairs, Defence, Health & Family Welfare, Personnel & Training, Posts and Chairman, Railway Board as Members. Till a final decision is taken based on the recommendations of the Committee, all Allowances may continue to be paid at existing rates in existing pay structure as if the pay had not been revised w.e.f. 01.01.2016, i.e., status quo may be maintained.
1.3 Committee on Allowances
1.3.1 In pursuance of the Cabinet decision, the Committee on Allowances was constituted vide Department of Expenditure‟s OM dated 22nd July 2016 (Annexure –I) with the Finance Secretary & Secretary (Expenditure) as Chairman, Secretaries of Home Affairs, Defence, Health & Family Welfare, Personnel & Training, Posts and Chairman, Railway Board as Members and Joint Secretary, Implementation Cell (IC) as Member Secretary.
1.3.2 The O.M. mentions that the Committee is being set up to examine the recommendations of the 7th CPC on Allowances in view of the significant departure from existing provisions relating to Allowances as recommended by the 7th CPC and
representations received in this regard. The Committee was mandated to go into the recommendations in regard to various allowances applicable to various categories of employees and, having regard to the representations made by the Staff Associations as also the suggestions of the concerned Ministries/Departments, to make recommendations as to whether any changes in the recommendations of the Commission are warranted and if so, in what form.
1.3.3 While the recommendations of the 7th CPC on pay have been notified, the allowances continue to be paid as per the 6th CPC regime in terms of the Cabinet decision on Allowances mentioned above.
Chapter 2
Deliberations of the Committee
2.1 The Committee on Allowances has been tasked with the responsibility to examine the recommendations of the 7th CPC on allowances in view of the significant departure from existing provisions and to recommend changes in the 7th CPC recommendations, wherever warranted, having regard to the representations made by the Staff Associations as also the suggestions of the concerned Ministries/ Departments.
2.2 In its first meeting, the Committee familiarized itself with the approach and methodology of the 7th CPC in arriving at the recommendations relating to allowances as also their recommendations relating to common allowances such as House Rent Allowance (HRA), Transport Allowance, Children Education Allowance, Daily Allowance and important allowances pertaining to some of the Ministries/ Departments. After being briefed by Joint Secretary (IC) on the general observations made by the 7th CPC, the broad categorization of Allowances, the analytical approach adopted and four principles used by the 7th CPC to decide the quantum of increase in allowances, the Committee deliberated upon the methodology to be adopted by the Committee in arriving at its recommendations.
2.3 Recommendations of the 7th CPC on Allowances
2.3.1 The 7th CPC prepared a list of 196 allowances reported to it and categorized them into
15 functional heads as under:
| S. No. |
Category |
No. of |
| 1 | Allowance payable for Additional / Extra Duty |
14 |
| 2 | Allowances related to Knowledge Updates |
3 |
| 3 | Allowances related to Deputation |
3 |
| 4 | Allowances related to Working on Holidays |
3 |
| 5 | Allowances related to Housing |
7 |
| 6 | Allowances related to Good Service |
4 |
| 7 | Qualification Allowances |
15 |
| 8 | Allowances related to Risk and Hardship |
51 |
| 9 | Allowance for Running Staff of Indian Railways |
13 |
| 10 | Allowance related to Sports |
2 |
| 11 | Sumptuary Allowances |
5 |
| 12 | Allowances related to Training |
2 |
| 13 | Allowances related to Travel |
13 |
| 14 | Allowances related to Uniform |
9 |
| 15 | Other Allowances |
52 |
|
Total |
196 |
The Committee observes that this compilation, in itself, is a significant step as a comprehensive list of all allowances paid in Government of India was not available earlier.
2.3.2 The 7th CPC has also recommended that allowances not mentioned in the list shall cease to exist and any allowance not mentioned in the list will have to be re -notified after obtaining due approval of Ministry of Finance. The Committee is of the view that this will ensure that there is no unchecked proliferation of allowances in future. The 7th CPC also proposed a new allowance, Special Train Controllers Allowance. As such, the Committee has considered altogether 197 allowances.
2.3.3 Observing that the trend worldwide is to include most of the additional items of remuneration as part of the Basic Pay and minimize the number of allowances, the 7th CPC has tried to reconcile that with the large number of allowances in India and the demand for even more allowances. All the allowances were examined as per a three – pronged approach: (i) an assessment of the need for continuation of each allowance; (ii) for allowances that are recommended for continuation, the appropriateness of the set of people covered by the allowance; and (iii) rationalization of the allowance, such as appropriateness of rates as also clubbing with similar allowance.
2.3.4 Based on the examination on these lines, the 7th CPC has recommended that 52 allowances be abolished altogether. Another 36 allowances are to be abolished as separate identities, but to be subsumed in an existing or a newly proposed allowance.
2.3.5 Allowances relating to Risk and Hardship (R & H) are to be governed by a Risk and
Hardship Matrix proposed by the 7th CPC.
Risk and Hardship Matrix
|
RH–Max |
HARDSHIP |
|||
|
High |
Medium |
Low |
||
|
RISK |
High |
R1H1 |
R1H2 |
R1H3 |
|
Medium |
R2H1 |
R2H2 |
R2H3 |
|
|
Low |
R3H1 |
R3H2 |
R3H3 |
|
2.3.6 For the allowances that have been retained and rationalized, the 7th CPC has sought to provide a raise that is commensurate with the rise in Dearness Allowance (DA). Accordingly, allowances that are fixed and not DA indexed have generally been raised by a factor of 2.25. Allowances that are partially DA indexed have been raised by a factor of 1.5 . Allowances fully indexed to DA have not been given any raise. Having regard to the proposed increase in the Basic Pay, the quantum of percentage based allowances has been rationalized by a factor of 0.8. The Report, however, also states that there are exceptions to the above approach that have been clearly brought out while discussing the allowances individually.
2.4 Scope and Methodology
2.4.1 The Committee noted that while examining the 7th CPC recommendations, E-CoS had decided that issues relating to the 7th CPC recommendations may be identified by various Ministries/Departments and they were requested to furnish the details of issues and their comments thereon in a prescribed proforma to the Implementation Cell. The information received from all the Ministries/Departments in response thereto was analysed by the Implementation Cell. Of the over 600 issues raised by the Ministries/ Departments in this exercise, about 144 pertained to allowances. Issues relating to allowances were also raised in the consultations undertaken by the E -CoS with various stakeholders. The Charter of Demands submitted by the National Council (Staff Side), Joint Consultative Machinery (JCM) also contained demands for reconsideration of around 20 allowances.
2.4.2 Noting that the Committee has been tasked with the responsibility to examine the recommendations of the 7th CPC on Allowances in the light of the representations made by Staff Associations as well as the suggestions of the Ministries/Departments, the Committee decided that only those demands which have arisen on account of the changes recommended by the 7th CPC may be taken up for consideration by the Committee. Demands that seek changes in the structure, rate or coverage of any allowance where no changes have been recommended by the 7th CPC, thus, are outside the purview of the Committee. The Committee has confined itself to examine representations received against only those recommendations that have proposed altering the existing dispensation.
Consultations with stakeholders
2.4.3 It was also decided that apart from examining the comments received from various Ministries/Departments on demands relating to Allowances, the Committee should also interact with stakeholders in order to familiarize themselves with the demands made by them and to understand their apprehensions pertaining to the recommendations on Allowances. It was, accordingly, decided that the Committee would interact with the National Council (Staff Side), Joint Consultative Machinery (JCM) and the representatives of Staff Associations of the Ministries/Departments which have significant number of allowances. The Committee held detailed interactions with representatives of the Staff Associations and senior officers from Ministry of Railways, Health and Family Welfare, Defence, Railways and Departments of Post and Atomic Energy to understand their demands. The discussion with Staff Associations was followed by discussion with senior officials from these Ministries/ Departments so as to get the official view of the Ministry/Department concerned on the demands raised by the Associations. The Staff Associations with whom the Committee interacted were advised to also forward their demands in writing to the Implementation Cell. The Ministries/Departments with whom the Committee interacted were also advised to forward their comments on the various demands raised by the Associations to the Implementation Cell.
2.4.4 The Committee held interactions with National Council (Staff Side), JCM and the representatives of All India Railwaymen‟s Federation (AIRF), National Federation of Indian Railwaymen (NFIR), All India Train Controllers Association (A ITCA), All India Guards Council (AIGC), Federation of National Postal Organization, National Federation of Postal Employees, Bhartiya Postal Employees Federation, Bhartiya Postal Employees Association (Group-C), Joint Action Council of Service Doctors Organization (JACSDO), All India GDMO Association (A IGDMOA), Delhi Administration Doctors Welfare Association (DADWA), Faculty Association (Maulana Azad Medical College and associated hospitals), Faculty Welfare Association (Lady Hardinge Medical College), Safdarjung Hospital Medical Officers Association, All India Government Nurses Federation (A IGNF), Railway Nurses of India, All India ESIC Nurses Federation, PGinurses Welfare Association, Trained Nurses Association of India (TNAI) and National Federation of Atomic Energy (NFAEE). Several re presentations have also been received from various employee associations on allowances.
2.4.5 As the Defence Forces do not have any Staff Associations, the Committee also interacted with the Tri Services Pay Staff (TRIPAS) as representatives of the Defence Forces in view of the large number of demands pertaining to Defence Forces personnel. Similarly, the Committee met the DGs of CAPFs and senior officers of SPG, IB and R&AW.
Examination of Demands
2.4.6 For the purpose of examination, the allowances were clubbed into three categories: (i) recommended to be abolished; (ii) recommended to be subsumed and (iii) retained and rationalized.
2.4.7 Once the Committee had interacted with various stakeholders and understood the rationale of their demands, the Committee deliberated upon them in detail. Nothing that there are detailed set of instructions governing most of the allowances that have to be factored in while examining the demands, the Committee requested a Group of Officers headed by Additional Secretary (Expenditure) with Joint Secretary (IC), Joint Secretary (Pers.) and Director (IC ) as other members to assist the Committee in examining the demands.
2.4.8 The Group of Officers examined all the demands in detail. While doing so, the Group of Officers took into consideration the existing provisions governing the allowances, the analysis and recommendations by the 7th CPC and the justification furnished by the Staff Associations and the Ministry/Department for seeking a modification of the recommendations. Based on their examination, the Group of Officers placed before the Committee their assessment of the merits of each demand as well as the possible ways in which the demands could be addressed.
2.4.9 The Committee relied upon the findings and suggestions placed before it by the Group of Officers which served as the starting point for the detailed discussions undertaken by the Committee in respect of each allowance for which demands were received. The inputs provided by the Group of Officers were one of the many inputs used by the Committee in their assessment of the merits of each demand and in finalising their recommendations on how the demands could be addressed. Wherever deemed necessary, the concerned Ministry/Department was requested by the Committee to bring out additional facts such as detailed provisions governing the allowance, the number of employees covered, financial implication etc. before finalizing its recommendations.
2.5 All the allowances for which demands were received and the recommendations of the Committee thereon are discussed in the following Chapters. The relevant paragraphs of the 7th CPC Report is mentioned alongside the name of the Allowance being discussed for ease of reference. Allowances recommended for abolition are discussed in Chapter 3, Subsumed Allowances are discussed in Chapter 4 and Retained and Rationalised Allowances are discussed in Chapter 5. There is a separate Chapter on Miscellaneous
Issues that engaged the attention of the Committee.
2.6 In all, the Committee held 15 formal meetings (Annexure – II) between August, 2016 to April, 2017 and took note of about 6 meetings held by the Group of Officers during this period. The Committee has tried to address the concerns of the stakeholders dispassionately while keeping in view the rationale behind the recommendations of the
7th CPC but at the same time, appreciating the logic of existing arrangements and administrative exigencies. The Committee tried to complete its formidable tasks as quickly as possible given the pressing preoccupations of its Members and the Member Secretary.
Download / Read Allowances Committee Report on 7th Pay Commission recommendations released by Finance Ministry
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