Telangana government staff may get half pay in December

Hyderabad: Chief Minister K. Chandrasekhar Rao on Saturday pressed the panic button regarding the adverse financial condition of the state government on account of demonetisation.

Mr Rao held an emergency meeting with chief secretary Rajiv Sharma and senior officials of the finance department to review the impact of demonetisation on the state’s finances. All revenue-earning departments have seen a drastic fall in income as most transactions have come to a halt.

The Chief Minister, it is learnt, has asked the chief secretary and finance department officials to prepare government employees to receive only half their salaries for this month, if the situation so demands. The government requires Rs 2,500 crore per month to pay salaries and pensions and Rs 1,100 crore to pay interest on loans.

The government may default on payment of interest to banks this month. The chief minister is likely to make a special request to banks to reschedule interest payments. Mr Rao has told officials to stop funds for all welfare schemes and development programmes and give priority to payment of staff salaries and pensions.

Difficult to meet expenses, KCR told
The CM has also directed Chief Secretary Rajiv Sharma and the finance department to find out how governments of other states are tackling this situation.

Officials informed the Mr Rao that the income from all revenue-earning departments has fallen drastically due to demonetisation, as all transactions have come to a halt, and even the Centre has imposed cuts amounting to nearly Rs 450 crore this month in tax devolution to states, making things worse for the state government. They told him that adjusting funds even to meet day-to-day expenses of the government has become difficult.

The government is pinning its hopes entirely on the commercial taxes department, which contributes Rs 1,200 crore every month. The taxes collected in October will be remitted to the treasury this month and the government wants to adjust these funds to pay salaries.

The state earns Rs 3,600 crore per month through its own revenues and gets Rs 1,000 crore from the Centre towards tax devolution. But this time, officials fear that the state’s earnings will fall by over 60 per cent, and the Centre has already imposed an over 40 per cent cut in tax devolution.

The other major revenue earner, the excise department, contributes Rs 110 crore per day. This has fallen to less than Rs 45 crore.