No plans on pay cut – government clarifies

The government clarified reports that said pay cuts for certain categories of central government employees to help the government meet its fiscal pressure as false and negated it through the official twitter handle of the Finance Ministry. It said no such proposals move is being planned.

ministry of finance

“There is no proposal under consideration of Govt for any cut whatsoever in the existing salary of any category of central government employees. The reports in some sections of media are false and have no basis whatsoever,” the finance ministry said on Twitter.

Fiscal constraint and government actions

The government is expected to have a higher fiscal deficit this financial year than anticipated due to lockdown. The government has already informed about borrowing an additional Rs. 4.2 lakh crores than the estimated Rs. 7.8 lakh crore. This is expected to rise the fiscal deficit to 5.5% than estimated. The government will lose a significant amount of revenue from both direct and indirect taxes.

The government last month had stopped revision on the rate for dearness allowance for 50 lakh employees and dearness relief for 61 lakh pensioners till June 2021. But the existing current rate of 17% for dearness allowance and dearness relief will be made available for central government employees to receive until June 2021. Thus there wouldn’t be any change in the rate of 17%.

The government borrowed about Rs. 1.06 lakh crore from the markets last month alone. The government has also announced its first relief package of  Rs. 1.07 lakh crore comprising free food grains, cooking gas to the poor, etc.

The second set of economic package is said to be aimed for the revival of industries is under discussion and expected to be released shortly. The state governments are also looking for funds to manage their deficit, some of them have already requested for the pending dues from the central government. Tamilnadu, Delhi & other state governments have also held Dearness Allowance hike for some of its employees till July 2021.

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