Pennies for bank retirees
Apropos of the news report “Central staff to get new payout soon” (FE, February 17), the central government staff must be a happy lot on learning about the government’s approval to revise their allowances proposed by it after the ongoing state elections are over, by March 15. The reworked allowances are likely to be effective from April 1 and, at least in the case of the employees in metro cities, the house rent allowances (HRA) could be a little more generous than the CPC’s award as a finance secretary-led panel is looking at HRA of 30% of basic pay for those in cities with a population of over 5 million, against 24% recommended by CPC. As is well known, unlike pay and pension, allowances are paid prospectively. Salary revision took effect from January 1, 2016. The pay panel had given an overall 23.55% increase in pay, allowances and pensions, including 16% pay rise, 63% surge in allowances and 23.6% increase in pension. However, it may be quite pertinent to point out that while the government has been generous and broad-minded in whole-heartedly accepting the major recommendations of the 7th Central Pay Commission, it has been turning a blind eye to the long-pending genuine demand of updation of pension to pensioners in the banking sector, including those belonging to RBI. Ironically, the passivity on the part of the government continues to dash their hopes for any justice, despite the fact that their own Pension Corpus Fund will be sufficient to service the new amount and no budgetary allocation is required. It may also be added that the Supreme Court, too, has held that the pension is not a bounty based upon the sweet will or grace of the employer. But, unfortunately, the continued step-motherly treatment to the retired bank employees is playing havoc with their fate.
SK Gupta, Delhi
Rethink those steel investments
I refer to the news item “India Inc commits R55,000 crore to Jharkhand” (FE, February 17). While investments in Jharkhand are more than welcome, it is a trifle disconcerting to see that the investments proposed are mostly from companies already overladen with debt. Whether these companies would be able to raise further borrowings to undertake the proposed projects is very doubtful, given that their balance-sheets are over-leveraged. The news item also states that large investments are expected in the steel sector by leading producers. Steel, as every one knows, has witnessed a huge glut and, in the wake of large scale dumping by China in the global markets, the industry has been plagued by over capacity abroad, causing low prices, resultant losses and sickness. In fact, there are several steel companies which are under restructuring and, in a few projects, the bankers are now practically the owners. These companies need to be revived to protect the huge investments already made in installing capacity and also for protecting the jobs they were hitherto providing. In such a situation, it is suggested that some of the sick steel companies be taken over by these investors, instead of planning new investments. Bankers need to approach the investors with attractive offers which is a win-win for both sides and companies that already over-leveraged be given individual benchmarks for bringing down their debt-equity ratios before embarking on fresh borrowings. In other words, if they want to make further investments, it must be done through fresh infusion of equity and without further deterioration of their financials.
R Vishwesh, Mumbai