Effect of 7th Pay Commission: Here it is reported that how the house rent allowance has been modified, how the affected CPI inflation has been revised

Impact of 7th Pay Commission: Under the Seventh Central Pay Commission (CPC), increase in home rent allowance (HRA) for Central Government employees has affected the inflation of inflation by around 35 basis points on its peak, monetary surveys of the RBI Policy Department according to the letter

Impact of 7th Pay Commission: Under the Seventh Central Pay Commission (CPC), increase in home rent allowance (HRA) for Central Government employees has affected the inflation of inflation by around 35 basis points on its peak, monetary surveys of the RBI According to the letter, the policy department modified the HRA under the Seventh CPC structure in July 2017.

"Pre-post analysis of CPI shows that the growth of HRA of 7th CPC has gradually pushed inflation print from July 2017, with extreme effects of 35 basis points (BPS)," said in the research. 'House rent allowance on CPI inflation' It has been said that some states have implemented similar amendments in salaries and allowances for their employees, but administrative delays between announcements and actual delivery, and partial distribution by the states are not showing any impact in the data.

"Even if it has been distributed, representation of the State Government's houses in the sample of housing can not be enough to capture the impact."

According to the recommendation of 7th CPC, the basic salary of government employees increased by 2.57. Accordingly, HRA was revised by 105.6%, which is more than double than the pre-CPC level.

Accommodation is a key component with CPI weight of 10.07 percent. Within the house, the weight of house rent is 9.51 percent and 0.56 percent of other different housing services.

Paper suggested that since the proper evaluation and understanding of HRA effect is important for policy analysis, therefore, the producers of CPI can consider for a future revision, whereas for each state to collect house rent data While preparing definite samples of housing, the actual part of the central and state government's homes in the representatives of the government's stake holder The homes that Rtibimbit can be kept.

Since the impact of states goes further, for the current series, the housing index for government housing and other housing can be published separately.
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