Corona : Showing its effect on India Govt.

 

The effect of two waves of Corona has started showing. The central government has cut its expenditure by 20 percent. The effect of corona will not be limited to this only, but it will trouble for a long time. Central government personnel should be prepared to keep their pockets loose till at least 2026. The Central Government is proceeding according to the recommendations given in Chapter Four of the 15th Finance Commission report to reduce expenditure. Inflation outlook will ease by 2026. No other Pay Commission recommendation or significant increase in pension and salary is expected during this period, except normal dearness allowance and increment. That is, nothing 'special' will be found.

Employees should not wait for the old pension system to be restored

As soon as the first wave of corona infection started, the central government had banned the increase in the salary and allowances of the workers. Due to this the workers have not got dearness allowance for 18 months. Pensioners are waiting for dearness relief. Other expenses are also being cut. Employees' organizations are continuously putting pressure on the government to implement the old pension system. NPS is not in the interest of the workers. This is causing financial loss to the workers. On the other hand, by announcing a cut in expenditure, the government has indicated that the employees should not wait for the old pension system to be restored. Employees should not have any expectation regarding special pay/perks. A plan for changes in the National Pension System is being prepared by the Pension Fund Regulator. It is the endeavor of the government that such changes should be made in the National Pension System, so that the employees are attracted towards it. They should remove the idea of ​​old pension system from their mind. Apart from making changes in the tax regime, facilities like preparation of systematic withdrawal plan and linking of annuity index with inflation, etc. can be started. This will increase the chances of getting good returns for the NPS employees.

Recommendations of the Finance Commission regarding pension and salary The commission's report reads, "While assessing pensions and salaries, we have taken into account the possible pressure on the revenue stream of the government and the need to maintain strict fiscal discipline, especially in non-developmental expenditure." As a result of implementation of the recommendations of Pay Commissions in the past, the Union Government has seen ups and downs both in terms of revenue expenditure and its pension and salary payments. Barring the impact of pay commissions or one-off policy decisions like 'One Rank One Pension' for defense pensioners, the growth in the Union Government's expenditure on pensions and salaries has generally been less than its gross revenue expenditure. No other Pay Commission recommendation or significant increase in pension and salary, except simple dearness allowance and pay hike, is expected in the period from 2021 to 2026. This scenario may continue for five years. The Government of India has banned dearness allowance for its employees and dearness relief for pensioners from January 2020 to July 2021. The Center has made it clear that once the moratorium is lifted, these payments will be reinstated with a retrospective effect.

Government will have to cut committed expenditure

The central government had also taken some measures last year to cut expenditure. This time also, the expenses of overtime, traveling allowance, cost of supplies and ration etc. have been cut by 20 percent. According to the commission's report, based on such decisions, salary hike is not expected during 2020-21 as compared to 2019-20. In view of the heavy pressure on revenue, the central government will cut its expenditure, to offset the increase on account of inflation and other allowances. According to this, during 2020-21 and 2021-22, a growth rate of one percent in salary and 1.5 percent in pension has been estimated. Thereafter, the annual increment of employees for the period, dearness allowance/relief to the employees and pensioners and the normatively assessed changes due to the depletion of the workforce, would be assessed for an increase of 5 per cent and a pension of 5.5 per cent. has done. It is expected by the Commission that the expenditure on the Government workforce will be rationalized judiciously with special emphasis on efficiency. This will keep the expenditure within the available resources.

Report

C Prime Bureau