Is the House Rent Allowance paid to Central Government employees as per the recommendations of Seventh Pay Commission sufficient?
If the question is to be answered at a superficial level, the answer is yes. Let us analyze things from the angle of a lower rung employee.
An employee is paid HRA at the rate of 24%, 16% and 8% of his basic salary based on the city where he works. For HRA purpose, cities in India are divided into three groups, namely X, Y and Z, and HRA is paid respectively at the rate of 24%, 16% and 8% uniformly for all categories of employees.
A person employed in Delhi will get 24% of his basic salary as HRA and an employee employed in Kanyakumari will get 8% of his basic salary as HRA. The minimum basic salary of a Central Government employee is Rs.18000. Accordingly, a person working in Delhi should get Rs.18000 x 24% = Rs.4320, and a person employed in Kanyakumari should get Rs.18000 x 8% = Rs.1440. But the minimum HRA applicable to all the three group of cities, namely X,Y and Z, are Rs.5400, Rs.3600 and Rs.1800 respectively. Accordingly, an employee working in Delhi will get Rs.5400, while an employee employed in Kanyakumari will get Rs.1800 as House Rent Allowance
