7th Pay Commission: Lavasa panel on allowances submits report to Jaitley

Report will be taken up by the Union Cabinet after it is examined by empowered group of secretaries

A high-level committee headed by Finance Secretary Ashok Lavasa, tasked with examining the Seventh Central Pay Commission’s (7th CPC) recommendations on allowances, submitted its report to Finance Minister Arun Jaitley on Thursday.

The report will now be examined by an empowered group of secretaries after which it will be taken up by the Union Cabinet, said a senior government official. The outlay for allowances for the 4.7 million central government employees is expected to be around Rs 29,000 crore, as forecast by the pay panel.

In June last year, after implementing the CPC proposals on salary and pension, Jaitley had announced the Lavasa panel to examine the suggestions on allowances. The panel was to submit its report by October. 

The decision on allowances was postponed because the CPC wanted a number of these to be abolished or subsumed, which employees’ unions opposed. A deferment on revising of allowances meant that as opposed to a burden of Rs 1.02 lakh crore as envisaged by the CPC, the government provisioned for Rs 84,933 crore in 2016-17 for pay and pension, including Rs 12,000 crore in arrears.

There are other recommendations on allowances which the Lavasa panel has examined. These include a change in the present system of accounting, wherein pay and allowances are clubbed and it is difficult to bifurcate them. The CPC recommended a separate object head for budgeting and accounting be used to record the expenditure.

Financial year change

A senior official said the Modi government was examining the benefits and drawbacks of changing the financial year from April-March to January-December. This comes after the Prime Minister, at the NITI Aayog’s governing council meeting last weekend, told chief ministers of the states that there had been suggestions to follow January-December as the financial year and the proposal should be considered.

“We will now do a cost-benefit analysis of (year ending) March 31 versus December 31,” said the official. 

If a change was decided upon, the official added, it would be applicable to the Centre, states and the private sector.

A panel headed by former Chief Economic Advisor Shankar Acharya was entrusted with the task of recommending whether such a switch was feasible. The panel has submitted its report to the government but it was not made public. Jaitley said in Parliament during the last session that the government was studying the recommendations.