7th Pay Commission: Modi Cabinet approves additional 1% DA to central govt employees

7th Pay Commission: Modi Cabinet approves additional 1% DA to central govt employees

The Union Cabinet agreed to increase dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners by one per cent. The hike in allowance will be effective from July 1, 2017.

The hike in allowances will put an additional burden of Rs 3068.26 crore every year on the nation's treasury. Even during the course of the current financial year, the exchequer will have to shell out Rs 2045.50 crore for implementing the increase in dearness allowance and relief between July 2017 and February 2018.

In a meeting chaired by Prime Minister Narendra Modi, the Cabinet decided today to increase DA by one per cent to compensate rise in prices. Central government employees and pensioners receive dearness allowance and dearness relief, respectively, at a rate of four per cent of their basic pay or pension. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

The Cabinet approved the reformed allowance structure recommended by the 7th Central Pay Commision back in June this year. Disbursing allowances according to the rates resulted in a steep rise in House Rent Allowance, along with rise in tough location allowance, conveyance allowance, and travelling allowance among others. Several allowances were also merged or scrapped.

The Cabinet also gave its nod for hiving off mobile tower assets of Bharat Sanchar Nigam Limited (BSNL) into a separate company. BSNL owns over 66,000 mobile towers out of 4,42,000 mobile towers presently operational in India. The resultant entity, however, will be entirely owned by BSNL.

This move allows BSNL to monetise the telecom towers at its disposal with the formation of a separate subsidiary company. "An independent, dedicated tower company of BSNL with a focused approach will lead to increasing of external tenancies and consequentially higher revenue for the new company, "read a statement by the Union Cabinet.