Festival bonanza: Bonus to govt staff to cost Rs 3,737 crore

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October 22, 2020 4:30 AM

Ahead of the festive season, the Cabinet on Wednesday decided to pay productivity-linked (PL) and ad-hoc bonuses immediately to nearly 31 lakh non-gazetted government/ public undertakings staff for FY20, a move that involves a cash outgo of Rs 3,737 crore, including Rs 950 crore from the central Budget.

performance, non-performance-linked bonus for 30 lakh Central Government EmployeesThe government is apparently relying a lot on its own staff to boost consumption demand.

Ahead of the festive season, the Cabinet on Wednesday decided to pay productivity-linked (PL) and ad-hoc bonuses immediately to nearly 31 lakh non-gazetted government/ public undertakings staff for FY20, a move that involves a cash outgo of Rs 3,737 crore, including Rs 950 crore from the central Budget. A total of `2,791 crore will be disbursed to 16.97 lakh non-gazetted employees of establishments like the railways, India Post, defence, EPFO and ESIC, while 13.7 lakh non-gazetted central government employees will get ad-hoc bonus.

Following the announcement, the railway trade unions, which had threatened a nationwide strike on Thursday demanding PL bonus to employees, called off the agitation.  About 11 lakh Class-3 and Class-4 staff of the transporter get Rs 18,000 per person as PLB every year. In fact, the labour costs of many government undertakings, especially Coal India, Railways and BSNL, are much higher in comparison to those in other central PSUs, leave alone private sector companies (see chart).

The railways spent close to Rs 87,000 crore on staff (salary plus pension) in FY20 even as its total expenses out of own revenue was a little over Rs 2 lakh crore, and is estimated to spend `93,000 crore on staff in FY21. This is even as the transporter continues to heavily subsidise the passenger segment. The railways is relying heavily on budgetary capex and extra budgetary resources, including market borrowings to meet its humongous capex needs.

In its report on railway finances, the comptroller and auditor general found, “If advance freight of Rs 8,351 crore from NTPC and CONCOR was not included in the (railways’) earnings of 2018-19, the operating ratio would have been 101.77% instead of 97.29%. The net surplus in 2018-19 was Rs 3,773.86 crore. Payment of bonus to non-gazetted employees for their performance in the preceding year is usually made before Durga Puja/Dussehra season.

The government is apparently relying a lot on its own staff to boost consumption demand. On October 12, finance minister Nirmala Sitharaman announced leave travel cash voucher and festival advance schemes for government staff. Demand infusion in the economy by employees of the central government and PSUs under these schemes is estimated to be about `19,000 crore. State government employees can catalyse additional demand of `9,000 crore, assuming that a half of the states will adopt the scheme.

The Cabinet also approved extension of the Market Intervention Scheme for procurement of apples in Jammu and Kashmir for the year 2020-21 on the same terms and condition as was done in 2019-20. The government has also allowed Nafed to utilise government guarantee of Rs 2,500 crore for this operation. The losses, if any, to be incurred in this operation will be shared between central government and UT administration of J&K on 50:50 basis.

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