7th Pay Commission which boosted central government employees income has been a big concern factor for the Reserve Bank of India (RBI) over the past few policies and has found mention in the report itself. RBI feared that HRA allowances would pressurize housing inflation and hence will result in uptick in Consumer Price Index (CPI). RBI is an inflation trajectory central bank, and its policy decisions have been, to a large extent, been affected by the movement of CPI. But looks like 7th Pay Commission implementation is no longer a threat to RBI's policy decision, which comes as a major win for both banks and borrowers. In his second monetary policy as RBI Governor, Shaktikanta Das has cut down policy repo rate by another 25 basis points to 6 pct. Not just that, he has also revised CPI inflation target for FY20. 

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According to RBI, the inflation path during 2019-20 is likely to be shaped by several factors. These are:

Firstly, low food inflation during January-February will have a bearing on the near-term inflation outlook. Secondly, the fall in the fuel group inflation witnessed at the time of the February policy has become accentuated. 

Apart from this, CPI inflation excluding food and fuel in February was lower than expected, which has imparted some downward bias to headline inflation. Also, international crude oil prices have increased by around 10% since the last policy.

Finally, inflation expectations of households as well as input and output price expectations of producers polled in the Reserve Bank’s surveys have further moderated.

Thereby RBI said, "Taking into consideration these factors and assuming a normal monsoon in 2019, the path of CPI inflation is revised downwards to 2.4% in Q4:2018-19, 2.9-3.0% in H1:2019-20 and 3.5-3.8% in H2:2019-20, with risks broadly balanced."

In February 2019 policy, RBI projected CPI inflation  to 2.8% in Q4:2018-19, 3.2-3.4% in H1:2019-20 and 3.9% in Q3:2019-20, with risks broadly balanced around the central trajectory.

On 7th Pay Commission, RBI that time said, "the effect of the HRA increase for central government employees has dissipated completely along expected lines."
Hence, we can now rule out the impact of 7th Pay Commission on inflation going forward.