The arrears are in lieu of the 7th Pay Commission wage hikes that have been accepted by the government with retrospective effect from January 1, 2016.
The government is likely to see a cash outflow of about Rs 20,000 to 25,000 crore in August, as it gets ready to pay arrears to nearly one crore employees.
The arrears are in lieu of the 7th Pay Commission recommendations that were recently adopted by the government. It effected a wage hike for nearly 47 lakh government employees and 52 lakh pensioners.
While the recommendations of the pay hikes were just accepted, it is effective in retrospect from January 1, 2016. Which means, one crore government employees stand to get a huge chunk in their August salaries.
A Finance Ministry official said that the government is expected to pay Rs 20,000 to Rs 25,000 crore in August as government wage arrears, Bloomberg TV India (BTVi), said in a tweet.
The official said that the government may issue cash management bills if there is a services crunch.
It may also resort to using the Ways and Means Advances (WMA) facility provided by the Reserve Bank of India (RBI), in August – September as the wage arrears payment is likely to erode the cash level, another BTVi said. The WMA helps states meet temporary cash crunch when there are mismatches between receipts and payments.
The 7th Pay Commission will see a pay out of Rs 1.2 lakh crore from the exchequer.
Source : DnaIndia