One of the issues around the 2014 pay revision report was the proposal to not pay the 20 percent house rent allowance (HRA) to those who are already occupying government accommodation.
There were negative reactions on the issue from rural teachers and dzongkhag-based civil servants staying in relatively poor quality accommodation.
Therefore, the Cabinet, which was given three options by the Ministry of Finance, has now opted to go with the first option of paying the actual difference between the 20 percent HRA and the actual rent being paid by civil servants to all civil servants occupying government or National Housing Development Corporation (NHDC) housing.
This simply means that if a civil servant is eligible to Nu 5,000 HRA, but is already staying in a government accommodation worth Nu 2,000 a month, he or she will get the balance Nu 3,000 HRA after deducting the government rent.
While this move will benefit many teachers and civil servants posted in remote areas with poor quality government housing, it will also benefit civil servants staying in cheaper government housing in major urban areas, like Thimphu and Phuentsholing.
The move will benefit 4,452 civil servants in total who will get back a part of their HRA. According to the MoF there will be a total financial implication of Nu 7.1 mn a month or Nu 85 mn per year.
This would be over and above the Nu 1.799 bn kept for the pay revision entailing additional financial cost to the government.
The MoF, in its presentation to the Cabinet, was not in favour of the first option, as they said that implementing this option is tantamount to providing both HRA and accommodation to the civil servants occupying government housing. It says this may not be fair to the majority of the civil servants who do not have access to such affordable housing facilities.
The second option, which was not accepted, was the same as the above except that it would not be for civil servants posted in the four thromdes. Under this option 3,320 civil servants would benefit and the financial implication was estimated at Nu 79.06 mn a year.
The third option, which was also not accepted, was making only civil servants posted in rural areas eligible, which would exclude all civil servants staying in government accommodation with the municipal boundaries of 20 dzongkhags. Here only 2,320 civil servants would benefit and the annual cost implication would be Nu 54.06 mn.
Given the potential for hue and cry over HRA from those being excluded, the Cabinet went with the most expensive first option of making everyone eligible for it.
During the third session of the second Parliament, held last year, the Parliament resolved to implement the HRA as submitted by the pay revision report, however, if there were problems in implementation, the finance ministry was directed to conduct a research and accordingly implement.
In the meantime, the HRA in 2014 was implemented as per the MoF inspired pay revision report that excluded civil servants who already had government accommodation.
However, after objection from mainly civil servants staying in poor quality government accommodation in remote areas, the Cabinet on 15 August 2014 directed the MoF to review the conditions on 20 percent HRA for civil servants posted in remote or rural locations.
Accordingly, the MoF reviewed the conditions for payment of HRA to civil servants posted in various dzongkhags including remote areas based on feedback received from a few dzongkhags and the Ministry of Education.
As per the review, it was found that the main appeal is for the payment of the surplus HRA after adjusting the rent of the government housing as most of the accommodations in the dzongkhags are small, without proper basic amenities and some constructed by communities to accommodate mainly teachers.
According to the MoF, the perceived HRA surplus was due to the low government accommodation rent rates compared to the higher market rent.
The MoF had proposed in keeping the status quo as paying the difference in HRA and government rent rates would have additional financial implications over and above the Nu 1.799 bn budget provision, and it would also maintain equity between civil servants occupying government housing and those staying in private accommodation.
However, in view of the submission of the education ministry and the dzongkhags the MoF has instead proposed option three of giving it only to civil servants in rural areas and paying full HRA to matrons and wardens.
Eventually, the Cabinet went ahead with the first option of paying the HRA to all civil servants.