The RBI is concerned about inflationary impact of 7th pay commission panel recommendations.
Once the allowances were given to the employees, the graph would go up on the consumer price index. The 7th pay commission has recommended 8 to 24 percent HRA to the Central and state government employees.
RBI said that the housing sector would feel the impact almost immediately after reviewing first monetary policy for 2017 – 2018.
As per RBI, once the Central Government decides to give allowances to its employees, the state government will follow the suit. The combined effect will push the inflation figures by 1-1.5 percent than the estimates of RBI. The Union cabinet approved implementation of the 7th pay commission’s recommendation last year. But the centre has not yet decided to give the HRA to its employees.
Modi Governments’ The Lavasa committee has missed the deadline of February 22 to submit its report for implementation. Union Finance Secretary Ashok Lavasa would submit the report by March, But committee has not yet given its recommendations.
However, on the basis of further reports, The Government is likely to take a decesion soon to giveHRA to its employees retrospectively from April 1, 2017.