7th Pay Commission Impact on Inflation: Employee Forum Says RBI Erred as Arrears Are Not Provided on HRA, Allowances

"There is no question of HRA and other allowances impacting inflation because they have been rolled-out without arrears," NJCA chief Shiv Gopal Mishra said.

New Delhi, Aug 5: The National Joint Council of Action, which has been leading the 7th Pay Commission negotiations with Centre, said the Reserve Bank of India erred while listing the roll-out of HRA and other allowances as one of the potential contributors towards inflation.

The third bi-monthly monetary policy report of RBI stated the possibility of  inflation receiving an impetus due to the roll-out of HRA as per the 7th Pay Commission. The policy report projects the inflation for Q3 and Q4 at 4 and 4.4 per cent respectively, higher than 3.5 and 4 per cent projected in the report released in June.

The monetary policy report released on Wednesday stated, “… as base effects fade, the evolving momentum of inflation would be determined by the impact on the CPI of the implementation of house rent allowances (HRA) under the 7th central pay commission (CPC).” It also listed the roll-out of GST as another major potential contributor towards inflation.

NJCA chief Shiv Gopal Mishra said the assessment of RBI is flawed in relation to 7th Pay Commission. “I don’t agree with them. It is absolutely wrong. There is no question of HRA and other allowances impacting inflation because they have been rolled-out in staggering manner. With no arrears on allowances, there would be no impact at all,” he said, while speaking to India.com.

Mishra opined that if the Centre would had provided arrears on allowances, pending since January 1, 2016, then the assessment of RBI would had made sense. “The employees have been deprived of what is their right. After an unprecedented delay, we have received no amount of arrears,” the employee forum leader added.

Mishra said he has appealed the government to reconsider their demand for arrears on allowances. The NJCA has written to the Cabinet Secretary, seeking roll-out of arrears on allowances from July 1, 2016. “If Centre cannot provide us arrears from January 1, 2016, which was the scheduled date of 7th Pay Commission roll-out, it should at least provide us with arrears from 1st of July last year, when the Cabinet gave in-principal approval.”