Demonetisation to pave way for higher allowances for central government employees?

New Delhi: Central government employees seeking higher allowances under 7th Pay Commission are pinning hope on government hiking their allowances once the dust settles on demonetisaion.

As per a website staffnews.in, central government employees feel that Finance Ministry is "better placed now after demonetisation to decide on raising allowances as recommended by the 7th Pay Commission".

"The employees are hoping that with the increased funds flow post demonetisation, government s better placed to meet the demands of govt employees. As has been reportedly earlier, the second amnesty scheme for tax defaulters – Pradhan Mantri Garib Kalyan Yojana, 2016 – estimated to net the Modi government a substantial amount, the financial outgo of Rs 1,02,100 crore no longer seems to be a hurdle”, said the site .

According to Bank of America Merrill Lynch (BofA-ML), besides containing the fiscal deficit, the additional taxes under the IDS II would fund the 7th Pay Commission as well as recapitalise PSU banks without cutting back on public capex.

The government is expected to raise Rs 1,00,000 crore of additional taxes under the Income Disclosure Scheme II (IDS II), which in turn will help in containing the 2017-18 fiscal deficit, said the report. 

The government on December 16, had announced that the second Income Disclosure Scheme (IDS II) will run till March 31. Under this scheme, black money hoarders would have time until March-end to come clean by paying 50 percent tax on bank deposits of junked currencies post demonetisation.

The government employees also hope that their demands may come through after the Budget 2017-18 in February.

They are hoping the government will quickly move on the issue that involves about 47 lakh Central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the defence forces.

National Council of the Joint Consultative Machinery (JCM) has also requested for an early redressal of the issue.

“Almost four months have passed (since September 1, 2016 meeting) without any outcome. All the Central Government Employees are quite agitated as well as are having mental agony because allowances of the VII CPC, have not been implemented. You are therefore, requested to fix-up a meeting of the Committee on Allowances, at an earliest to resolve the issues placed in the memorandum of the Staff Side(JCM) on various allowances,” said Shiv Gopal Mishra, Secretary, Staff Side in a note written to Finance Ministry.

The 7th Pay Commission had examined 196 allowances and gave its recommendations on abolishing or raising some of them, and recommending others to be subsumed with other perks. It had proposed 138.71 percent hike in HRA and 49.79 percent for other allowances, while submitting its voluminous report in November 2015.