The union cabinet chaired by Prime Minister Narendra Modi has given its approval to the finance ministry's proposal for upgradation (reclassification) of certain cities and towns for the purpose of grant of house rent allowance (HRA) and transport allowance to central government employees.
On the basis of the final population figures of Census-2011, two cities have qualified for being upgraded from 'Y' class to 'X' class and 21 cities have qualified for being upgraded from 'Z' to 'Y' class for the purpose of HRA.
Six cities have qualified for being upgraded from `Other Places' to specified higher class for the purpose of transport allowance.
The revised classification of cities will take effect from 1 April 2014. The upgradation of 29 cities would bring in additional financial burden of Rs128 crore on the exchequer for the year 2014-15.
HRA and transport allowance are admissible to central government employees depending upon employees' basic pay (including NPA where applicable) and grade pay and the classification of the city/town where they are posted. The existing classification of cities and towns in different classes, viz, 'X', 'Y' and 'Z' for the purpose of HRA and 13 specified cities classified earlier as 'A-1', 'A' and `Other Places' for the purpose of transport allowance, is as per the criterion recommended by the 6th Pay Commission.
The existing qualifying limits of population for classification for HRA purpose is 5 million and above for 'X', 0.5 to 5 million for 'Y' and below and 0.5 million for 'Z' class city.
Transport allowance is payable at 'higher rates' in 13 specified cities classified earlier as 'A-1' and 'A' (that is those cities having population of 2 million and above) and at 'lower rates' in all other places.
Cities to be upgraded and re-classified as `X' include Ahmadabad and Pune.
Cities to be upgraded and re-classified as `Y' include Nellore, Gurgaon, Bokaro Steel City, Gulbarga, Thrissur, Malappuram, Kannur, Kollam, Ujjain (municipal area), Vasai-Virar City (municipal area), Malegaon, Nanded-Waghala (municipal area), Sangli, Raurkela, Ajmer, Erode, Noida, Firozabad, Jhansi, Siliguri and Durgapur.
Cities and towns to be upgraded on the basis of census-2011 for grant of transport allowance include Patna, Kochi, Indore, Coimbatore and Ghaziabad.