Rs1,750-cr poll bonanza for govt employees

Ruchika M Khanna

Tribune News Service

Chandigarh, May 31

In an effort to woo 3.5 lakh state government employees and their families, the government is all set to give them Rs 1,750-crore bonanza.

Even as the state government is grappling with slow growth in tax collection, the “vote politics” is forcing the state government to woo the employees.

The second validity of the cash credit limit given by RBI to get Rs 17,523 crore for purchase of wheat expired today, even as Rs 1,550 crore is still pending for release from some banks. This will again hit the state of finances and stunt the overall growth of revenue receipts now.

Economic considerations aside, the state government has taken a decision to release Rs 1,400 crore arrears of dearness allowance in four equal installments from next month. It will also pay six per cent DA to employees, due since January this year.

The six per cent DA to be given to the employees will mean an additional burden of Rs 350 crore on the state exchequer. The six per cent DA is expected to be announced within a week, while the pending arrears (23 per cent DA) are likely to be paid to employees in four monthly instalments.

Even as the second validity of the limit expired today, the government has managed to pay Rs 13,700 crore to the farmers and Rs 250 crore for labour and commission of arhtiyas. However, the entire tax liability on purchase of foodgrains (Rs 1,650 crore) is still to be paid.

“We hope to get the validity enhanced from the RBI again as some banks are yet to get approval from their Board of Directors to advance the loan for wheat purchase. Once this is done, the tax will be paid,” said an official in the Food and Supply Department.

It is this additional revenue that will then help the state government pay the 23 per cent arrears (10 per cent DA due from January 2014 to September 2014, seven per cent DA from July 2014 to February 2015 and six per cent from July 2015 to December 2015).