7th Pay Commission: Government set to approve higher allowances, Finance Ministry sources say ‘no impact on inflation’, claims report

Mohammed Uzair Shaikh
"There is a contradiction between the RBI and the Finance Ministry," top union official Shiv Gopal Mishra said.

New Delhi, Apr 26: The Finance Ministry is set to approve higher allowances for the Central Government employees, claims a media report. The Committee on Allowances, headed by Finance Secretary Ashok Lavasa is expected to submit its recommendations to Centre shortly. The National Joint Council of Action (NJCA), which is representing employees in talks with Government over the anomalies related to 7th Pay Commission, is hopeful of higher allowances to be implemented from May 1.

A Finance Ministry source, while speaking to Sen Timesclaimed that Centre is set to approve higher allowances from May after receiving the recommendations from Lavasa committee. The report, citing the same anonymous source, claims that Finance Ministry believes higher allowances would cause ‘no impact on inflation’.

However, the RBI had raised apprehensions over the implementation of 7th Pay Commission, cautioning Centre over the potential rise in inflation.

“In case the increase in house rent allowance as recommended by the 7th CPC is awarded, it will push up the baseline trajectory by an estimated 100-150 basis points over a period of 12-18 months, with this initial statistical impact on the CPI followed up by second-order effects,” RBI had said.

NJCA convenor Shiv Gopal Mishra had expressed disappointment over the comments made by RBI. While speaking to India.com, he said, “There is a contradiction between the RBI and the Finance Ministry. Secondly, if there are employees whose salaries need to be revised, then RBI cannot say that keep paying them less to keep inflation under control.”

“If you have employed the workers, you have to give them wages. And when the revision of wages is due, then the employer is bound to revise it. RBI should find some other alternative to keep inflation under control,” he added.