The Union cabinet on Saturday approved upgradation of 29 cities and towns on the basis of 2011 population census for providing higher house and transportation allowance to central government employees.
The revised classification of cities would be effective from April 1, 2014 and cost the exchequer approximately Rs 128 crore for 2014-15.
"The cabinet has approved reclassification/upgradation of certain cities/towns on the basis of Census 2011 for the purpose of granting House Rent Allowance (HRA) and Transport Allowance to central government employees," communications and IT minister Ravi Shankar Prasad told reporters in New Delhi.
One the basis of the census, 2 cities - Pune and Ahmedabad - have been upgraded to 'X' class from 'Y' and 21 cities to 'Y' from 'Z' for the purpose of HRA, an official statement read.
These 21 cities are Nellore, Gurgaon, Bokaro Steel City, Gulbarga, Thrissur, Malappuram, Kannur, Kollam, Ujjain, Vasai-Virar City, Malegaon, Nanded-Waghala, Sangli, Rourkela, Ajmer, Erode, Noida, Firozabad, Jhansi, Siliguri and Durgapur.
That apart, six - Patna, Kochi, Indore, Coimbatore and Ghaziabad - have been advanced to 'Specified Higher Class' from 'Other Places' for the purpose of transport allowance, the statement said.
So far, the Census 2001 has been used for deciding the HRA and transport allowance of central government officials posted in these towns and cities.
The existing qualifying threshold of population for HRA classification is 50 lakh and above for X, 5-50 lakh for Y and below 5 lakh for Z class cities.
Transportation allowance is payable at 'higher rates' in 13 specified cities classified earlier as 'A-1' and 'A' (those with a population of 20 lakh and above) and 'lower rates' for the rest.
The cities and towns are classified as X, Y and Z for the purpose of HRA and 13 specified cities classified as A-1, A and Other Places for transportation allowance.