Demonetisation Drive: Higher Allowances for Government Employees Deferred Till Year-End

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Demonetisation Drive

In yet another fallout of the Central government’s demonetisation drive in an effort to curb black money, stop terror funding and rid counterfeit money,there seems to be little respite for those thronging banks and ATMs, both stand-alone and bank-adjoining in order to withdraw or exchange old 500 and 1000 rupee denominations, which is now ‘illegal tender’, after PM Modi’s crackdown on November the 8th.

Finance Minister Jaitley still coping with post-domenitisation drive

In more bad news, the queues before banks and ATMs will not ease in a few days and may not do so in a few weeks either; top Finance Ministry officials were reported as saying. Sources in the same interview also statedthat the higher allowances of the central government employees may not be decided till December the 30th.

Officials in the know were quoted as saying,“The central government employees will have to wait for a few weeks as the demonetisation drive is open till December 30.Therefore,unless the banks can begin to function with a modicum of efficiency and normalcy, the government will not announce higher allowances to save demonetisation chaos.”

The Supreme court earlier had come down heavily on the government’s decision, stating that a large number of daily wage-earners, carpenters, vegetable sellers and others engaged in menial jobs, who earn their bread and butter on a daily basis, were badly affected by the demonetisation drive.

These developments come in the wake of the constitution of the ‘Committee on Allowances’, which was set up in July this year on the direction of the cabinet, tasked with looking into the provision of allowances other than dearness allowance under the 7th Pay Commission recommendations; final touches to its report remain. The committee met the deadline of four months given to it by the cabinet to submit the report, according to Finance Ministry officials. The Committee head,Finance Secretary Ashok Lavasa said recently that they wereready to submit theirreport, as soon as Finance Minister Arun Jaitley contacted them.The Finance Minister will then have to wait for the situation to normalize to receive report on higher allowances.

Among other provisions, the 7th pay commission had recommended abolishing 51 allowances and subsuming 37 others out of 196 allowances.The central government employees and pensioners got theirs arrears of basic pay and pension in one go in August salaries and pension respectively for implementation of the 7th Pay Commission recommendations effective from January 1, 2016.They also got 2 per cent Dearness allowance (DA) in the new pay matrix effective from July 1, 2016.

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