he Punjab government is all set to implement a money saving formula by offering new recruits a lump sum salary for three years, which will be lesser than the pay scale of people already working on similar posts. The move will be introduced to deal with the financial crisis the Punjab government is facing. Under this new system, employees will not get grade pay and additional dearness allowance for three years after which they are regularised.
Punjab Finance Minister Parminder Singh Dhindsa told this newspaper, "Paying lump sum salary to new recruits is not just a money saving exercise, it would also help improve the work culture and efficiency of the employees because services of only good workers will be regularised."
Responding to criticism that this is a step against youngsters, Dhindsa said, "The state is bearing huge burden of employee salaries that consumes about 70% of the total budget. We have realised that the government is paying at least twice the amount to class III and class IV employees for their services in comparison to private sector." He also said that Punjab was not the first state to offer lump sum salaries, Gujarat and some of the other states are already following this model.
This is the second time that Punjab government is trying to bring in this new system of paying lump sum salaries to the new employees for a stipulated period. Earlier in 2011, the state had included a provision of lump sum salary for three years in the Punjab Civil Services (Rationalisation of Certain Conditions of Services) Act. This provision, however, could not be implemented as some new recruits challenged it in the court. The court gave a verdict in favour of new recruits.
The state government, so far, has decided to keep specialist doctors out of this new clause as the state is already facing a shortage of specialist doctors. Meanwhile, over 7000 teachers in the state are already drawing lump sum salaries for over two years, under the new act, and waiting to be regularised on the completion of three years.
To improve grim fiscal health of the state, the government has also decided to increase retirement age of its employees from 58 to 60 from 1 October 2013. This move of deferring retirement benefits is expected to save Rs 1,000 cr for the state. The state spends over Rs 20,000 cr on annual salary, wages and pension. The government has also decided to increase the age limit of recruitment from 37 to 38 years.
According to sources in the Finance Department, the financial crisis has driven Punjab close to an emergency situation. A few thousand teachers in the state have not received their salaries for two months. The state has also failed to pay dearness allowance to its employees after November last year. The state is yet to pay the first instalment of the dearness allowance amounting to about Rs 1,000 cr, to its employees. The second instalment will be due by the end of July. The state has also not been able to pay arrears of employee salaries that they were entitled to with the implementation of Sixth Pay Commission.