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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


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.


No. of

1 Allowance payable for Additional / Extra Duty


2 Allowances related to Knowledge Updates


3 Allowances related to Deputation


4 Allowances related to Working on Holidays


5 Allowances related to Housing


6 Allowances related to Good Service


7 Qualification Allowances


8 Allowances related to Risk and Hardship


9 Allowance for Running Staff of Indian Railways


10 Allowance related to Sports


11 Sumptuary Allowances


12 Allowances related to Training


13 Allowances related to Travel


14 Allowances related to Uniform


15 Other Allowances




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

Level    >=9:
₹ 31500 pm
Level    <=8:
₹ 21000 pm











Level >=9: ₹ 25000 pm
Level                    <=8:
₹ 17300 pm


Level >=9: ₹ 16900 pm
Level <=8: ₹ 9700 pm

Level   >=9:   ₹ 5300 pm
Level   <=8:   ₹ 4100




Level   >=9:   ₹ 16900
Level <=8: ₹ 9700 pm


Level >=9: ₹ 10500 pm
Level <=8: ₹ 6000 pm

Level   >=9:   ₹ 3400
Level   <=8:   ₹ 2700




Level >=9: ₹ 5300 pm
Level <=8: ₹ 4100 pm


Level >=9: ₹ 3400 pm
Level <=8: ₹ 2700 pm

Level   >=9:   ₹ 1200 pm
Level   <=8:   ₹ 1000

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.

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