Second installment of pay panel arrears set to be released

Written by fe Bureaus | New Delhi | Updated: Aug 27 2009, 04:30am hrs
Ushering in the festive season, the Centre on Tuesday decided to release the second installment of salary arrears to its 5.4 million employees. The move is expected to cost the exchequer Rs 17,623 crore.

The first installment has already been paid in 2008-09. It has now been decided that the remaining 60% of arrears is likely to be paid to the concerned government servants, as per an internal missive of the finance ministry. Surprisingly, the Centre is silent on the date when the arrears would be released.

The hefty recommendations of the Sixth Pay Panel last year increased the Centres wage bill by Rs 17,798 crore annually and had also brought an additional liability of Rs 29,373 crore on account of the arrears effective from January 2006. To ease this financial burden, the Cabinet had decided to release 40% of the salary arrears in 2008-09, while the remaining 60% was to be released this year.

Although the Pay Commission arrears were calculated in the Centres expenditure for 2009-10, the government had been thinking of postponing it to next year in order to ease its financial burden. In 2009-10, the Centre is estimated to spend over Rs 10 lakh crore and is faced with a record deficit of 6.85 of the GDP and is expected to borrow Rs 4.5 lakh crore from the market.

So to mitigate some of this expenditure, the finance ministry memorandum said that the government servants would be encouraged to deposit their arrears in general provident fund (GPF) account. As in the case of the first instalment of the arrears, government servants would be permitted to deposit their arrears in their GPF accounts, the memorandum said.