Official Press Note :- 7th Pay Allowances Declared for Central Employers.

Official Press Note :- 7th Pay Allowances Declared for Central Employers.

PRESS INFORMATION BEAURO RELEASE
CABINET APPROVES RECOMMENDATIONS OF THE

7th CPC ON ALLOWANCES
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi approved the recommendations
of the 7th CPC on allowances with some modifications. The revised rates of the allowances shall come into
effect from 1st July, 2017 and shall affect more than 48 lakh central government employees.
While approving the recommendations of the 7th CPC on 29th June, 2016, the Cabinet had decided to
set up the Committee on Allowances (CoA) in view of substantial changes in the existing provisions and a
number of representations received. The modifications are based on suggestions made by the CoA in its
Report submitted to Finance Minister on 27th April, 2017 and the Empowered Committee of Secretaries set
up to screen the recommendations of 7th CPC.
7th CPC recommendations on Allowances
The 7th CPC had adopted a three-pronged approach in examining a total of 197 allowances which
involved an assessment of the need for continuation of each allowance, appropriateness of the set of people
covered by the allowance and rationalisation which involved clubbing of allowances with similar objectives.
Based on the examination on these lines, the 7th CPC recommended that 53 allowances be abolished
and 37 be subsumed in an existing or a newly proposed allowance.
For most of the allowances that were retained, the 7th CPC recommended a raise commensurate with
inflation as reflected in the rates of Dearness Allowance (DA). Accordingly, fully DA-indexed allowances
such as Transport Allowance were not given any raise. Allowances not indexed to DA were raised by a factor
of 2.25 and the partially indexed ones by a factor of 1.5. The quantum of allowances paid as a percentage of
pay was rationalised by a factor of 0.8.
A new paradigm has been evolved to administer the allowances linked to risk and hardship. The
myriad allowances, their categories and sub–categories pertaining to civilians employees, CAPF and defence
personnel have been fitted into a table called the Risk and Hardship Matrix (R&H Matrix). The Matrix
has nine cells denoting varying degrees of risk and hardship with one extra cell at the top named as RH - Max
to include Siachen Allowance. Multiple rates applicable to individual allowances will be replaced by two
slab rates for every cell of the R&H Matrix.
Modifications approved by the Cabinet
The modifications approved today were finalised by the E-CoS based on the recommendations of the
CoA. The CoA had undertaken extensive stakeholder consultations before finalising its recommendations. It
had interacted with Joint Consultative Machinery (Staff side) and representatives from various staff associations.
Most of the modifications are on account of continuing requirement of some of the existing arrangements,
administrative exigencies and to further the rationalization of the allowances structure.
Financial Implications
The modifications approved by the Government in the recommendations of the 7th CPC on allowances
will lead to a modest increase of ?1448.23 crore per annum over the projections made by the 7th CPC.
The 7th CPC, in its Report, had projected the additional financial implication on allowances at ?29,300 crore
per annum. The combined additional financial implication on account of the 7th CPC recommendations
along with the modifications approved by the Cabinet is estimated at ?30748.23 crore per annum.
Highlights of Cabinet approval on Allowances

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