New Delhi: The central government is considering skipping the annual increment to its employees this fiscal — a move that could potentially help the administration save Rs 4,000 crore, ThePrint has learnt.
Government officials said the administration wants to save up the money in light of the “unpredictability of Covid-19 and the vaccination drive”.
“We have initiated discussions to freeze annual increments for central government employees, which will be applicable at all levels. We will make a decision soon,” a senior government official told ThePrint.
Officials said discussion in this regard is going on with the various stakeholders concerned. The finance secretary has held meetings with secretaries of the ministry, and NITI Aayog officials to deliberate on the matter.
A second government official said the Covid-19 pandemic severely impacted government income as the outbreak slowed economic activity and hurt revenue collection.
“The government is contemplating other measures as well to save money knowing the unpredictability of Covid-19 and also the vaccination drive, but a final decision is not taken yet,” the official added.
If the government goes ahead with the decision, it will affect 48.34 lakh central government employees.
In April, the government had put on hold the hike in dearness allowance (DA) for the employees to offset the increase in its spending on account of the pandemic.
It had announced a DA hike of 4 per cent in March. The DA of central government employees was increased to 21 per cent from 17 per cent, which was going to be effective from January 2020. This was expected to cost the government Rs 14,595 crore in 2020-21, but the Covid crisis forced the government to freeze the hike.
The government has already imposed a cap on spending by ministries and departments, and even passed a bill in September to reduce for one year the salaries of MPs by 30 per cent to meet the Covid crisis. It has also suspended the Member of Parliament Local Area Development Scheme or MPLADS for two years.
Govt planning to push to scrap increments at state-run firms
The second government official said since the government has saved a big chunk of Rs 14,000 crore by freezing the DA hike, this time it wants to save money for its Covid vaccine drive and similar such needs for the future.
“The move will not harm employees because they were expecting a salary cut on the line of many state government employees. They will feel the necessity of this decision,” said the official.
The government is also planning to push some relevant ministries to scrap increments at state-run companies under their control, which will lead to additional savings, he added.
The pandemic has shrunk corporate and domestic income, and private consumption, which, in turn, has choked the Centre’s income.
The pandemic had a substantial impact on GST collection and the projected total GST compensation shortfall in the current fiscal stands at Rs 2.35 lakh crore. Of this, as per Centre’s calculation, shortfall of about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is due to the impact of Covid on states’ revenues.