RATIONALISATION OF ALLOWANCES:-

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Methodology of Rationalization of Allowances by 7 CPC:-
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The 7 CPC vide Para No 8.2.5 Clause 4 has referred to the following methodology for the purpose of rationalization of the
existing allowances which is to be reckoned for the purpose of pay revision for the Central Govt employees.

Nature of Allowance Rationalizing Factor Interpretation

Allowances that are in nature of Existing Allowance Amount *
Raised by factor of 2.25
fixed amount but not DA indexed 2.25
The quantum of percentage has
Percentage Based allowances Existing Percentage * 0.8
been rationalized by a factor of 0.8

Allowances that are in the nature of

a fixed amount but are partially Raised by a factor of 1.5 Existing * 1.5
indexed to DA

Comparative Rationalization of Allowances in case of IOCL:

From literal interpretation of Clause No. 8.2.5 of 7th CPC, the following existing allowances applicable to us can also be
categorized under the following broad head which will help us in fixing the individual allowances at par with the Central Govt
Employees, though not less :-

Nature of Allowances Applicable Allowances

Children Education Allowance,
Hostel Subsidy allowance,
Allowances that are in nature of fixed Professional Updation Allowance,
amount but not DA indexed are to be Tea/Coffee Reimbursement,
raised by a factor of 2.25 as follows:- Washing Allowance,
Transport Assistance,
[Existing Allowance Amount * 2.25] Rationalization Adjustment
Allowance,
Refreshment Expenses.
Percentage Based allowances are to
Special Relief (North East)
be rationalized by a factor of 0.8 as
Allowance,
follows:-
Non Practicing Allowance,
House Rent Allowance,
[Existing Percentage * 0.8]
Cafeteria Allowance
Allowances that are in the nature of a
fixed amount but are partially indexed
to DA are to be raised by a factor of 1.5
Lump-sum LFA
as follows:-

[Existing * 1.5]

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Recommendation of Allowances by 3 PRC on the basis of 7 CPC:-
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Further, while reviewing the recommendation in 3 PRC, it is observed that the following allowances has been rationalized with a
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factor of 0.8 in line with 7 CPC recommendation as mentioned aforesaid, which confirms our understanding:-

Sl.
Name of Allowance Existing Structure 3rd PRC Recommended
No.
Special Relief (North East 10% of BP
12.5% of BP
Allowance) reduced [12.5 *.08 = 10]
1
 Non Practicing Allowances 20% of BP
25% of BP
(NPA) for Medical Officers [25*.08 = 20]
2
House Rent Allowance 24% of BP
3 (X Class City) 30% of BP [30*0.8=24]
House Rent Allowance 16% of BP
4 (Y Class City) 20% of BP [20*0.8=16]
House Rent Allowance 8% of BP
5 (Z Class City) 10% of BP [10*0.8= 8]
Underground Mining 12% of BP
6 Allowance 15% of BP [15*0.8= 12]

CAFETERIA ALLOWANCES:-
Recommendation of Cafeteria Allowances and its analysis:-
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3 PRC have reduced In line with Cafeteria has been reduced to 35% with provision of enhancement in Ceiling of
Cafeteria by 25% of 35% (i.e., 8.75%) whenever IDA rises by 50%.

In the last Revision, 50% DA was reached in Oct2011 (after a span of 4 years 9 months) and 100% reached in
January2015 (after a span of 8 years).
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Hence, assuming the AICIP(W) factor to be constant in the next ten years, we will have one increment of 8.75% in the 5
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Year with the total Cafeteria % of 43.75% (35% + 8.75%) on BP and another in the 9 year by 8.75%, thereby
aggregating the cafeteria to 52.5% (43.75% +8.75%) of BP.
This implies that the existing cafeteria of 50% of BP has been tactfully substituted with 35%, 43.75% and 52.5% to be
applicable in Year 1-5, Year 6-9 and Year 10 respectively.
But one relief has been provided wherein Medical facilities have been kept outside the purview of cafeteria. This will give
us an added benefit of 1.5% of BP which in the existing pay structure is being deducted from Cafeteria on account of
medical benefits.
LTC/LFA has not been mentioned as outside the purview of Cafeteria.

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Whether the Cafeteria is commensurating with the 7 CPC recommendation:-

An attempt has been made to cross-check whether the existing cafeteria is commensurating in the same proportion to those
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recommended in 7 CPC and it is observed that the Cafeteria granted to us is lesser as compared with the 7 CPC
recommendation.

Two approaches have been considered for cross checking the same:-

1. Direct Approach: Cafetria is a percentage based allowance hence after rationalization the same with a factor of 0.8 it
arrives at 40% instead of the recommended 35%

2. Indirect Approach: Back calculation of Cafeteria has been done in the existing scenario and it has been observed that
the minimum cafeteria should be 48% for Grade A Officers.

The details of both the approaches are provided below:-

Direct Approach: Enhancement of Cafeteria Allowance by Use of Factor of 0.8:

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Since 7 CPC has recommended rationalization of percentage based allowances by using factor of 0.8 and Cafeteria is
akin to a Percentage based allowances, we can logically approach for enhancement of Cafeteria by 5% to 40%.

Indirect Approach: Back Calculation of existing Cafeteria allowances with that in the current scenario:-

For the purpose of back calculation of Cafeteria, the existing allowances forming the part of cafeteria has been revised by using
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the rationalizing factor as mentioned in 7 CPC report and the following steps are being used:-
Step 1: Rationalization of existing Allowances in line with 7th CPC recommendation:-
Step 2: Grade-wise Cafeteria allowance as per the aforesaid rationalization is computed below:-
Step 3: Computation of Grade wise recommended Cafeteria:-
 Step 4: Comparision of Recommended Cafeteria in Step 2 amount with the Calculated amount in Step2

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Step 1: Rationalization of existing Allowances in line with 7 CPC recommendation:-
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In line with the 7 CPC recommendation read with the 3 PRC recommendation, the following existing allowances have been
rationalized to understand whether the Allowances provided to the CPSEs Officers are commensurating in proportion of
allowances recommended to the Central Govt employees in the 7 th CPC recommendations.

7th CPC
Sl. Name of Corresponding Amount as applicable
Existing Structure recommend
No. Allowance to us
ation
Existing
Children Rs 2000/- per month
Allowance
1 Education [Rs 1000 per month per child Rs 4500 per month
Amount *
Allowance subject to maximum 2 child]
2.25
Existing
Rs 3000/- per month
Hostel Subsidy Allowance
2 [Rs 1500 per month per child Rs 6750 per month
Allowance Amount *
subject to maximum 2 child]
2.25
Grade A: Rs 1000 per month Grade A: Rs 2250 per month
Grade B: Rs 1100 per month. Grade B: Rs 2475 per month.
Grade C: Rs 1200 per month. Existing Grade C: Rs 2700 per month.
Professional
Grade D: Rs 1600 per month Allowance Grade D: Rs 3600 per month
3 Updation
Grade E: Rs 1800 per month. Amount * Grade E: Rs 4050 per month.
Allowance
Grade F: Rs 2000 per month 2.25 Grade F: Rs 4500 per month
Grade G: Rs 2200 per month Grade G: Rs 4950 per month
Grade H: Rs 2400 per month. Grade H: Rs 5400 per month.
Rs 1100 per month Existing
Tea / Coffee [For locations where Allowance
4 2475 per month
Reimbursement subsidised canteen facilities Amount *
does not exists] 2.25
Existing
Washing Allowance
5 Rs 85/- per month 191/- per month
Allowance Amount *
2.25
Grade A: Rs 1250 per month Grade A: Rs 2813 per month
Grade B: Rs 1500 per month. Grade B: Rs 3375 per month.
Grade C: Rs 1700 per month. Existing Grade C: Rs 3825 per month.
Transport Grade D: Rs 2000 per month Allowance Grade D: Rs 4500 per month
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Assistance Grade E: Rs 2200 per month. Amount * Grade E: Rs 4950 per month.
Grade F: Rs 2350 per month 2.25 Grade F: Rs 5288 per month
Grade G: Rs 2500 per month Grade G: Rs 5625 per month
Grade H: Rs 2500 per month. Grade H: Rs 5625 per month.
Grade A to C: 2.25 *[BP+DA] in two
Grade A to C: 1.5 *[BP+DA] years
7 Lump sum LFA Grade D to F: 2.0 *[BP+DA] Existing * 1.5 Grade D to F: 3.0 *[BP+DA] in two years
Grade G to I: 2.5* [BP+DA] Grade G to I: 3.75 * [BP+DA] in two
years
 Rs 85 for service period less
than 5 years (Assumed Grade Rs 191 for service period less than 5
A) years (Assumed Grade A)
Existing
Rationalization Rs 110 for service period Rs 247 for service period between 5 to
Allowance
8 Adjustment between 5 to 12 years 12 years (Assumed B - D Grade)
Amount *
allowance (Assumed B - D Grade)
2.25
Rs 281 per month for service period
Rs 125 per month for service between 12 to 19 years (Assumed E - F
period between 12 to 19 years Grade)
(Assumed E - F Grade)
Existing
Refreshment Allowance
9 Rs 1074 per month Rs 2417 per month
Expenses Amount *
2.25

Step 2: Grade-wise Cafeteria allowance as per the aforesaid rationalization is computed below:-

The Grade-wise Cafeteria break up of allowances in the Revised Scenario, taking into consideration the rationalization of
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allowances in 7 CPC are as follows:-

Furnitur
Childre
Professio Ration Average e
n Tea Wash
Hostel nal Transport alisati Notional LFA Mainten Refrresh
Gra Eductai Coffee ing Gross
Subsid Updation Assistanc on per month on ance @ ment
de on
y Allowanc
Reimburs Allow
e Adjust a span of 10 15% of Expenses
Total
Allowan ement ance
e ment years the total
ce
cost

A
4,500 6,750 2,250 2,475 191 2,813 191 6,897 1,625 2,417 30,109
B
4,500 6,750 2,475 2,475 191 3,375 247 8,060 1,875 2,417 32,365
C
4,500 6,750 2,700 2,475 191 3,825 247 9,113 2,250 2,417 34,468
D
4,500 6,750 3,600 2,475 191 4,500 247 10,715 2,813 2,417 38,208
E
4,500 6,750 4,050 2,475 191 4,950 281 12,647 3,750 2,417 42,011
F
4,500 6,750 4,500 2,475 191 5,288 281 15,019 4,313 2,417 45,733
G
4,500 6,750 4,950 2,475 191 5,625 - 15,828 5,250 2,417 47,986
H
4,500 6,750 5,400 2,475 191 5,625 - 15,828 5,625 2,417 48,811

Step 3: Computation of Grade wise recommended Cafeteria:-

Grade Revised BP Cafeteria @ 35% of BP

A 62,854 21,999
B 73,456 25,709
 C 83,048 29,067
D 92,388 32,336
E 109,048 38,167
F 129,494 45,323
G 129,494 45,323
H 129,494 45,323

Step 4: Comparison of Recommended Cafeteria in Step 2 amount with the Calculated amount in Step2

Therefore, it is observed that the Revised Cafeteria (In %) is less than the existing cafeteria (In %) and it should be capped at
Minimum 48% as per the details below.:-

Recommended Cafeteria as per Proposed

Grade Revised BP Shortfall
Cafeteria above Calculations Cafeteria %

A
62,854 21,999 30,109 (8,110) 48
B
73,456 25,709 32,365 (6,656) 44
C
83,048 29,067 34,468 (5,401) 42
D
92,388 32,336 38,208 (5,872) 41
E
109,048 38,167 42,011 (3,845) 39
F
129,494 45,323 45,733 (410) 35
G
129,494 45,323 47,986 (2,663) 37
H
129,494 45,323 48,811 (3,488) 38
 MEDICAL ALLOWANCES:-

Fixed Medical allowances:-

A fixed Medical allowance of Rs 1000/- per month for treatment of Out of Patient Department has been recommended
which will provide us with Rs 12000/- per annum and will not part of Cafeteria.
FMA may be limiting factor in the near future on Medical bills as the same is paid for meeting expenditure on day to day
medical expenses that do not require hospitalization. Hence, OPD bills reimbursement may be stopped.
Such allowances are prevalent in prevalent in Private Sector wherein the employee are paid FMA and no bills
reimbursement for OPD are being made by the Company. This allowance is also being provided to the Central Govt
Pensioners @ Rs 500/- per month for compensating their day to day medical expenses. Reference may be made to Para
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8.17.51 of the 7 CPC.

Cashless Policy for providing hospitalization through insurance companies:-

It appears that through this policy, there may be limit to hospital nominations, financial ceilings, nature of treatment,
bed charges, etc.

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Reference in 7 CPC:-
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Vide Para 9.5.18 of the 7 CPC, it has been mentioned that the Commission strongly recommends the introduction of
health insurance scheme for Central Government employees and pensioners.