7th Pay Commission: How Jaitley saved Crores of Rupees this Financial year

7th Pay Commission: How Jaitley saved Crores of Rupees this Financial year.

It has been more than six months since the Narendra Modi government cleared the recommendations of the 7th Pay Commission

Government employees are, however, yet to enjoy the full benefits of the recommendations with the decision on allowances still to be announced.

The 7th pay commission recommendations cover more than one crore government employees and pensioners. The commission recommended a 14.27 per cent hike in basic pay.


1. The hike in basic pay has resulted in a marginal increase in the total salary drawn by government employees. This is because allowances form a sizeable chunk of their pay.

2. Till date, the government has not made announcements on when exactly does it plan to start giving out the allowances to its employees.

3. The government had asked the Committee on Allowances headed by Finance Secretary Ashok Lavasa to review the recommendations of the 7th Pay Commission on allowances.

4. The government has given the committee an extension up to February 22, 2017 to submit its report on higher allowances. In October last year, Finance Secretary Ashok Lavasa had said the committee was ready with its report.

However, no extension of period was asked by the committee, but still the government delayed the implementation by this extension.

5. The government’s dilly-dally on allowances has largely been attributed to demonetisation and the Assembly elections in five states. The 7th Pay Commission has recommended scrapping 53 of the 196 allowances, and merging a few others.

6. The hiked salary, as per the recommendations of the pay commission, is given in two parts. The increase in the basic salary is calculated from the time the government implements the recommendations of the commission, i.e. on a back date basis. As a result, employees are eligible for arrears on their basic pay.

7. The increase in allowances, however, is applicable from the date the government decides to disburse it. Therefore, government employees are not entitled to arrears.

8. Usually, once the recommendations of the pay commission are approved, the increase in basic pay is followed by an increase in allowances.

9. It is widely believed that the government will decide on a hike in allowances once the Assembly elections are over. In other words, employees can expect to get allowances from April, which marks the beginning of the new financial year.

So, finally the government has acted smart, the government has effectively saved a lot of money this financial year by not making an announcement on allowances. Government employees, on the other hand, have expressed their disappointment over being denied the full remuneration for a long time, but who cares about it!

Source: India Today


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