• search
For Quick Alerts
For Daily Alerts

7th Pay Commission: Will impact on inflation have bearing on pay hike?


Will the impact on inflation following the increase of HRA under 7th Pay Commission have a bearing on the government's decision to increase the basic minimum pay of Central Government employees.

pay commission, 7th pay commission, pay hike, central government employees, inflation, seventh pay commission, 7th cpc latest news, basic minimum pay

Sources say that this would not have any impact and discussions on the pay hike and fitment factor are still on. Recently a research by the RBI's monetary policy department had said that the increase in House Rent Allowance had impacted CPI inflation by nearly 35 basis points at its peak.

"Ex-post analysis of CPI shows that the 7th Pay Commission's HRA increase pushed up headline inflation prints gradually from July 2017, with a peak impact of about 35 basis points (bps)," said the research paper titled 'Impact of Increase in House Rent Allowance on CPI Inflation'.

While government sources maintained that the pay hikes in future would be inflation based, the existing dialogue on fitment factor is still on. This report will have no bearing, the source also said. The government is currently discussing the issue and is likely to announce a pay hike by the end of the year. The pay hike would be effective from April 2018 onwards.

Meanwhile, the report said that while some states have implemented similar revision in pay and allowances for their employees, the impact is not showing up in the data due to reasons like administrative delays between announcement and actual disbursals, and partial disbursals by states.

"Even if disbursements have been made, the representation of state government houses in the sample of dwellings may not be adequate to capture the impact," it said.

As per the recommendation of the 7th Pay Commission, the basic pay of government employees rose by a factor of 2.57. Accordingly, HRA stood revised by 105.6 per cent, that is, by more than double the pre-CPC level.

Housing is a major component in CPI with a weight of 10.07 per cent. Within the housing, the weight of house rent is 9.51 per cent and that of other miscellaneous housing services 0.56 per cent.

For Daily Alerts

For Breaking News from Oneindia
Get instant news updates throughout the day.

Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more