Prime Minister Narendra Modi‘s ambitious demonetisation drive has been getting enthusiastic reactions across the country, although there has been criticism from certain quarters too. Now it seems that this ‘surgical strike’ on black money and counterfeit currency will impact Central Government employees too.They may now have to wait longer than they had anticipated for a decision on the implementation of hikes in allowances, as the government has kept it on hold.

A Finance Ministry official has been quoted as saying,”The process of an announcement of the higher allowances has been kept in abeyance on account of the opposition parties protests against demonetisation. The Finance Ministry is compelled after receiving reports on Banks and ATMs chaos from states to keep in abeyance the higher allowances till things normalise.” Earlier, Central government employees had demanded that their salary for the current month be paid in cash rather than be deposited in bank accounts, considering the difficulties faced to withdraw money.


PM Modi’s surprise announcement on November 8 to demonetise the then-existing Rs 500 and Rs 1,000 notes in order to curb hoarding of black money and counterfeiting of Indian currencies has been met with strong opposition from the political class, apart from logistical problems, thereby forcing the government to shift to fire-fighting mode.

It must be mentioned with relation to the 7th Pay Commission that the government had formed a committee headed by Finance Secretary Ashok Lavasa that was mandated to submit its views on the 7th Central Pay Commission’s (CPC) proposals on the hike in allowances. The committee held its first meeting on July 22 and had a four-month deadline to complete its task. Critics of the Modi government, especially political parties, have repeatedly slammed the demonetization move, saying it has put the common man in hardship even as banks struggle to cope with the huge demand for cash. P Chidambaram, Congress leader and former finance minister in the UPA government, had called it “demonetization of cash” and “an exercise in futility.”

The CPC examined 196 allowances and given its recommendations on abolishing or raising some of them while recommending others to be subsumed with other perks. The recommendations of the 7th CPC cover 47 lakh Central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the defence forces. It had also proposed a whopping 138.71 percent hike in HRA and 49.79 percent for other allowances while submitting its voluminous report last November.

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