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
1. Number of allowances recommended to be abolished and subsumed:
Government has decided not to abolish 12 of the 53 allowances which were recommended to be
abolished by the 7th CPC. The decision to retain these allowances has been taken keeping in
view the specific functional requirements of Railways, Posts and Scientific Departments such as
Space and Atomic Energy. It has also been decided that 3 of the 37 allowances recommended to
be subsumed by the 7th CPC will continue as separate identities. This has been done on account
of the unique nature of these allowances. The rates of these allowances have also been enhanced
as per the formula adopted by the 7th CPC. This will benefit over one lakh employees belonging
to specific categories in Railways, Posts, Defence and Scientific Departments.
2. House Rent Allowance
HRA is currently paid @ 30% for X (population of 50 lakh & above), 20% for Y (5 to 50 lakh)
and 10% for Z (below 5 lakh) category of cities. 7th CPC has recommended reduction in the
existing rates to 24% for X, 16% for Y and 8% for Z category of cities. As the HRA at the
reduced rates may not be sufficient for employees falling in lower pay bracket, it has been decided
that HRA shall not be less than ?5400, ?3600 and ?1800 for X, Y and Z category of cities
respectively. This floor rate has been calculated @ 30%, 20% and 10% of the minimum pay of
?18000. This will benefit more than 7.5 lakh employees belonging to Levels 1 to 3.
7th CPC had also recommended that HRA rates will be revised upwards in two phases to 27%,
18% and 9% when DA crosses 50% and to 30%, 20% and 10% when DA crosses 100%. Keeping
in view the current inflation trends, the Government has decided that these rates will be
revised upwards when DA crosses 25% and 50% respectively. This will benefit all employees
who do not reside in government accommodation and get HRA.
3. Siachen Allowance
7th CPC had placed Siachen Allowance in the RH-Max cell of the R&H Matrix with two slabs
of ?21,000 and ?31,500. Recognizing the extreme nature of risk and hardship faced by officers /
PBORs on continuous basis in Siachen, the Government has decided to further enhance the rates
of Siachen Allowance which will now go up from the existing rate from ?14,000 to ?30,000 per
month for Jawans & JCOs (Level 8 and below) and from ?21,000 to ?42,500 per month for
Officers (Level 9 and above). With this enhancement, Siachen Allowance will become more
than twice the existing rates. It will benefit all the soldiers and officers of Indian Army who are
posted in Siachen.
4. Dress Allowance
At present, various types of allowances are paid for provisioning and maintenance of uniforms/
outfits such as Washing Allowance, Uniform Allowance, Kit Maintenance Allowance, Outfit
Allowance etc. These have been rationalised and subsumed in newly proposed Dress Allowance
to be paid annually in four slabs @ ?5000, ?10,000, ?15,000 and ?20,000 per annum for various
category of employees. This allowance will continue to be paid to Nurses on a monthly basis in
view of high maintenance and hygiene requirements. Government has decided to pay higher rate
of Dress Allowance to SPG personnel keeping in view the existing rates of Uniform Allowance
paid to them (which is higher than the rates recommended by the 7th CPC) as also their specific
requirements. The rates for specific clothing for different categories of employees will be governed
5. Tough Location Allowance
Some allowances based on geographical location such as Special Compensatory (Remote Locality)
Allowance (SCRLA), Sunderban Allowance & Tribal Area Allowance have been subsumed
in Tough Location Allowance. The areas under TLA have been classified into three categories
and the rates will be governed as per different cells of R&H Matrix and will be in the
range of ?1000 - ?5300 per month. The 7th CPC had recommended that TLA will not be admissible
with Special Duty Allowance (SDA) payable in North-East, Ladakh and the Islands. Government
has decided that employees will be given the option to avail of the benefit of SCRLA at
pre-revised rates along with SDA at revised rates
6. Recommendations in respect of some important allowances paid to all employees:
(i) Rate of Children Education Allowance (CEA) has been increased from ?1500 per month / child
(max. 2) to ?2250 per month / child (max.2). Hostel Subsidy will also go up from ?4500 per
month to ?6750 per month.
(ii) Existing rates of Special Allowance for Child Care for Women with Disabilities has been doubled
from ?1500 per month to ?3000 per month.
(iii) Higher Qualification Incentive for Civilians has been increased from ?2000 - ?10000 (Grant) to
?10000 - ?30000 (Grant).
7. Recommendations in respect of some important allowances paid to Uniformed Services:
Defence, CAPFs, Police, Indian Coast Guard and Security Agencies
i. The 7th CPC has recommended abolition of Ration Money Allowance (RMA) and free ration to
Defence officers posted in peace areas. It has been decided that Ration Money Allowance will
continue to be paid to them and directly credited to their account. It will benefit 43000 Defence
ii. Technical Allowance (Tier - I & II) are paid to Defence officers belonging to technical branches
@?3000 per month and ?4500 per month. 7th CPC has recommended that Technical Allowance
(Tier - II) be merged with Higher Qualification Incentive for Defence personnel. In view of the
specific requirements of Defence Forces for the Defence personnel to keep pace with changing
Defence requirements and technologies, the Government has decided not to discontinue Technical
Allowance. The list of courses for these allowances will be reviewed to remain in sync with
the latest technical advancements in Defence.
iii. The facility of one additional free railway warrant (Leave Travel Concession) presently granted
to personnel of Defence Forces serving in field/high altitude/CI Ops shall also be extended to all
personnels of CAPFs and the Indian Coast Guard.
iv. Rates of High Altitude Allowance granted to Defence Forces and CAPF personnel will be governed
by the R&H Matrix. The rates will go up from ?810 - ?16800 per month to ?2700 –
?25000 per month.
v. Field Area Allowances are granted to Indian Army, Air Force & CAPF personnel. The rates of
Field Area Allowances (Modified Field, Field & Highly Active) will be governed by the R&H
Matrix. The rates will go up from ?1200 - ?12600 per month to ?6000 - ?16900 per month.
Classification of field areas for this allowance will be done by Ministry of Defence for Defence
personnel and by Ministry of Home Affairs for CAPFs.
vi. The rates of Counter Insurgency Ops (CI Ops) Allowance, granted to Defence and CAPFs while
deployed in counter – insurgency operations will be governed by the R&H Matrix. The rates will

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