Published On: Fri, Apr 10th, 2020

Coronavirus impact: Govt employees to face salary cut, if financial emergency declared

New Delhi: A lot of speculation that the Modi government might consider imposing a financial emergency to deal with the challenges of providing more funds to help the economy overcome the adverse impact of coronavirus.

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The most significant power of financial emergency under Article 360 is that the Union government can reduce salaries and allowances of Central government employees and the states government employees, including judges of High Courts and the Supreme Court.

Salaries and allowances account for an estimated 25 per cent of the total expenditure of Union of India for all states government employees, this was about Rs 9 trillion for financial year 2019-2020.

Central government employees’ salaries and allowances is estimated at Rs 2.5 trillion.

Thus a financial emergency will give power to the central government to to lower its total salary budget of about Rs 11.5 trillion for all central and state government employees.

A 30 per cent cut in salaries will give the central government a saving of about Rs 3.45 trillion.

Many state governments have already decided to cut the salary of its employees ranging from 10% to 75%. While there will be a 50% cut in the pension of retired government employees of Telangana.

Recently, all the Members of Parliament including the President, the Vice President, and the State Governors, Chief Ministers, Ministers in states, ML have decided to accept a 30% pay cut for the next year.

India will also eagerly wait for the Supreme Court response to the public interest litigation filed by Center for Accountability and Systemic Change (CASC) on the need for imposing a financial emergency.

The above PIL was perhaps filed in the light of Finance Minister Nirmala Sitharaman’s announcement that there is “no move to impose a financial emergency as was claimed by some reports.”

TST

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