There were nearly 30 interactions from June 22-23 as the panel met different stakeholders. At present, Central government employees receive HRA at rates of 10%, 20% and 30% depending on the category of the city in which they are posted.

Almost all employee and pensioner organisations that appeared before the Commission, however, urged a revision of these rates, arguing that current allowances are inadequate in the face of sharply escalating rents.

Rising Rents

Employee representatives highlighted the growing gap between HRA payments and actual rental expenses in metropolitan cities. According to Manjeet Singh Patel, National President of the All India NPS Employees Federation (AINSPEF), lower-level government employees are finding it increasingly difficult to manage household budgets due to soaring accommodation costs.

“A Level-1 employee posted in Delhi receives around ₹5,400 as HRA under the current 30% rate. However, even a modest two-bedroom apartment typically costs at least ₹12,000 a month in rent. We have therefore proposed a minimum HRA of 36% for X-category cities. If accepted, the revised HRA could rise to about ₹13,600 after the implementation of the 8th Pay Commission,” Patel said.

The demand comes against the backdrop of changes made under the 7th Pay Commission. Initially, HRA rates were fixed at 8%, 16%, and 24% for Z, Y, and X category cities respectively. These were subsequently revised to 10%, 20% and 30% after Dearness Allowance (DA) reached 50% in January 2024.

Several employee organisations have submitted detailed proposals to the Commission, with most seeking higher HRA rates and a mechanism linking future revisions to DA.

Demands On HRA

The National Council–Joint Consultative Machinery (NC-JCM), the apex body representing central government employees, has recommended HRA rates of 40% for X-category cities, 35% for Y-category cities and 30% for Z-category cities. It has also proposed automatic upward revisions in HRA in line with increases in DA.

The Indian Railways Technical Supervisors’ Association (IRTSA) has suggested restructuring the existing three-tier HRA system into four categories based on city population. Under its proposal, cities with populations above 50 lakh would attract HRA at 40% plus DA, while cities with populations between 20 lakh and 50 lakh would receive 30% plus DA. Cities with populations between 5 lakh and 20 lakh would fall under a 20% plus DA bracket, while towns with populations below 5 lakh would continue to receive 10% plus DA, it suggested.

IRTSA has further proposed linking HRA directly to the Consumer Price Index or DA, with rates automatically increasing by 25% whenever DA rises by 25 percentage points.

The All India Defence Employees’ Federation (AIDEF) has also backed higher HRA rates of 40%, 35% and 30% for X, Y and Z category cities respectively, mirroring the NC-JCM’s recommendations.

Meanwhile, the Federation of National Postal Organisations (FNPO) has sought HRA rates of 40% for X cities, 35% for Y cities and 30% for Z cities. The federation has additionally demanded that HRA be linked to DA and extended to pensioners.

AINSPEF, in its memorandum, has proposed HRA rates of 36%, 24% and 12% for X, Y, and Z category cities respectively. The federation has also recommended that DA be merged with basic pay once it exceeds 25%, with subsequent DA increases calculated on the revised basic salary.

With stakeholder consultations underway, the Commission is expected to examine the competing proposals before formulating its recommendations on pay, allowances, and pension benefits for millions of central government employees and retirees.