Date : 21.1.2017

7th pay commission: This is why Modi government not giving hike to 47 lakh employees

Reports suggest that the committee under the chairmanship of finance secretary Ashok Lavasa has finalised its report for salary hike in accordance with the recommendations of the seventh CPC, but the government is unable to pay the allowances to its employees due to cash crunch.

More than 14 months have passed since the seventh pay commission report was submitted and little less seven months have elapsed since the union cabinet approved implementation of the salary hike recommendations, but the central government employees are still awaiting the good news.

Demonetisation is said to be the reason behind the delay in announcing allowances by the Narendra Modi government for the 47 lakh employees and 53 lakh pensioners. The number of beneficiaries includes 14 lakh employees and 18 lakh pensions from the armed forces

HOW DEMONETISATION AFFECTS PAY HIKE: THINGS TO KNOW

1. The government has announced that it will implement the seventh pay commission's recommendations from January 1 last year. But, in the aftermath of demonetisation, the government is not in position to make the final decision.
2. The seventh pay commission proposed a 138.71 per cent hike in housing allowance (HRA) and 49.79 per cent for other allowances.
3. The pay commission estimated that during the current fiscal, the hike in allowances would add a burden of Rs 29,300 crore (Rs 17,200 crore under HRA and Rs 12,100 crore under other allowances). This is a huge sum but after demonetisation, the government is working hard to stave off the cash crunch that set in.
4. The Modi government has constituted a committee to look into the recommendations regarding allowances and the manner of their implementation.
5. Some reports suggest that the committee under the chairmanship of finance secretary Ashok Lavasa has finalised its report, but the government is unable to pay the allowances to its employees due to cash crunch.
6. The employees' unions have been putting pressure on the finance ministry to announce hike in allowances at the earliest.
7. The announcement of assembly elections in five states has given some time for the government as it cannot announce pay hikes till the model code of conduct is in place.
8. The assembly elections have given the government time till March 8, by when there would be some additional cash in circulation. But, by then the budget would have been presented and accommodating over Rs 29,000 crore for salaries and pensions in the budge may pose a problem.
9. The delay in implementation of the seventh pay commission's recommendations has caused tremendous irritation and frustration among employees.
10. The BJP may have to face a backlash in the assembly elections in the five states, two of which is ruled by the party either directly or in alliance. Thus, demonetisation move by the Modi government may strike a double blow to the BJP in polls.