Centre clamps down on PSE staff reimbursement

Written by Praveen Kumar Singh | Praveen Kumar Singh | New Delhi | Updated: Jun 27 2009, 04:34am hrs
In a bid to curb central public sector enterprises (CPSEs) salary bills, the government has asked them to immediately stop the practice of reimbursing the repair & maintenance charges on accommodations leased to their employees. The directive would hit around 4 lakh executives in the 240-odd central government-owned public sector undertakings.

CPSEs paid Rs 64,306 crore as emoluments during 2007-08. The figure was 22% higher than their expenditure on salaries in 2006-07, despite the fact that the number of employees went down from 16.14 lakh to 15.7 lakh during the period.

The directive has come at the behest of the Comptroller & Auditor General of India (CAG), which pointed out that some CPSEs are reimbursing charges to the extent of two-month rental on the leased accommodation. The CAG said such charges are reimbursed on a mere self-certification by executives. The Central Vigilance Commission has also raised similar objections to the practice.

The CAG has pointed out that such benefits are given on self-leased houses also. In most of the cases, the landlord and the beneficiary are the same person, it told the Department of Public Enterprises (DPE). In certain cases, CAG found that employees were claiming the benefit twice a year-once as part of composite lease rent and then as a reimbursement.

Taking a serious stance, DPE has issued a circular to all CPSEs on May 20, which states, CPSEs have not been permitted to reimburse any amount of lease rent to its executives towards repair & maintenance charges for the accommodation. It is again emphasised that leased accommodation should not become a source of additional income for the executives concerned.

According to a senior official of a CSPE, the facility is given to employees above the rank of assistant officers.

Responding to the circular, Standing Conference of Public Enterprises chairman Arup Roy Choudhury told FE, We agree with the concern that undue advantage should not be given to the employees by the way of reimbursement of repair & maintenance charges on the basis of self-certification. Choudhury is also the chairman and managing director of National Buildings Construction Corporation Ltd, which has managed a turnaround in recent years.

This is not the first time the government has sought to fix this practice, though. In 2003, it asked the CPSEs boards to exercise their control meticulously to see that no undue advantage accrues to the concerned officers. In 1999, PSU boards were told that they have the flexibility to review and provide for an adequate level of leased accommodation for executives who are entitled to this facility.

The latest circular clarifies that the 1999 memo does not allow boards to reimburse any amount of lease rent to its executives towards repair & maintenance charges for the leased accommodations.