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Saturday, October 19, 2002, Chandigarh, India

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Decision to freeze DA, bonus deferred
Tribune News Service

Prime Minister Atal Behari Vajpayee, Finance Minister Jaswant Singh and Deputy Chairman of Planning Commission K. C. Pant at the Chief Ministers' meeting in New Delhi on Friday.
— PTI photo

New Delhi, October 18
Government employees are likely to receive dearness allowance (DA) and bonus in accordance to earlier norms as the meeting of the state Chief Ministers Finance Ministers today failed to arrive at a consensus on the ticklish issue of freezing the DA.

Finance Minister Jaswant Singh said any decision on the issue of freezing DA, bonus and commutation of pension required a broader consensus which was currently not present. “Therefore, any decision on this would have to be deferred,” he said, adding that a consensus had also not emerged on the proposed debt swap scheme for states.

The states expressed difficulties in the debt swap programme during the current year due to cash flow problems. The High-Powered Committee of the Finance Ministers would discuss the proposal further with the states to arrive at an agreement.

On the recent Supreme Court judgement on increasing pay scales of subordinate judiciary, the Finance Minister said the issue would be discussed elaborately with the state governments as it involved an outgo of Rs 14,000 crore.

There was yet no consensus among states on the proposed debt swap programme and many of them had expressed cash flow problems. A high-powered committee would look into the matter, he added.

The total outstanding of the states at present was around Rs 5,50,000 crore of which about 50 per cent were loans from the Centre.

The proposed programme was expected to enable the states to repay high-cost Central Government loans at softer terms and would yield interest savings to the tune of Rs 37,000 crore.

Expressing concern in the consistent rise in debt servicing obligations by state-owned enterprises, the Finance Minister said a review was currently being undertaken on the overdraft regulation scheme for the state. A committee had been constituted by the Reserve Bank of India (RBI) under the chairmanship of former Expenditure Secretary C Ramachandran.

The meeting, chaired by Mr Vajpayee, was also attended by Deputy Chairman Planning Commission K.C. Pant, saw various points of views being put forward by different states on a plethora of issues.

Mr Jaswant Singh said state borrowings would have to be brought in line with prudential debt limits indicated in the State reform programmes.

Haryana Chief Minister Om Prakash Chautala said the states should be paid compensation in proportion to the additional revenues generated under VAT.

Haryana was geared to implement VAT from April 1, 2003, as the draft legislation was ready, computerisation was in progress and officials had been trained and dealers educated on the issue.

He urged the Planning Commission to include the districts of Mahendragarh and Jind on the list of most backward districts. The commission would allocate Rs 2,500 crore for the development of 100 most-backward districts in the country.

The Chief Minister said there was inequity in the formula evolved for the distribution of proceeds from the cess on petrol and diesel. The collection of cess in Haryana would be about Rs 285 crore a year, but the state was provided Rs 50 crore for rural roads and Rs 31.4 crore for roads and bridges.

The Himachal Pradesh Government today requested the Centre to allow the state to levy power generation tax and pollution cess and go for silviculture harvesting which together would generate an additional revenue of Rs 500 crore.

Chief Minister Prem Kumar Dhumal asked the Centre to evolve a consensus among the states before implementing decisions on pay and pension of the Central Government employees as most of the states followed the Central pattern in this regard.

He also wanted a consensus on the implementation of pay scales of judicial officers as per the Supreme Court directives. The Centre should bear the entire additional expenditure arising from it as the states were facing a resource crunch, he said.

Due to the Fifth Pay Commission, the pay expenditure of his government had gone up to Rs 1,608 crore during 2000-01 as against Rs 988 crore during 1998-99, forcing the state to resort to heavy borrowings and increasing its debt burden, Prof Dhumal said.