New Delhi, Oct. 14: The government is unlikely to go ahead and implement the proposals for reducing retirement age of employees from 60 to 58 and freezing dearness allowance.
If the government reduces retirement age by two years, it would have to immediately cough up Rs 25,000 crore for paying superannuation benefits at a time when its coffers are nearly empty.
As for the freeze in the dearness allowance hike, a section of Union ministers and BJP leaders are opposed to the move.
BJP sources pointed out that the party was already becoming unpopular with the middle and lower-middle classes because of measures taken by the government which were considered “anti-people”.
The poll rout in Jammu and Kashmir, the latest in a string of electoral defeats, has also unnerved the BJP leadership. With elections due in Gujarat in a couple of months, the party does not want the government to take any unpopular steps, the sources said.
There are about 37.7 lakh government employees, including the armed forces, and the Centre can ill-afford to overlook their interests. The earlier argument was that by freezing hike in DA, the government could save Rs 5,000 crore and divert it for development work.
There is a clash of interest between states and the Centre over reducing the retirement age.
States have been mounting pressure to peg retirement at 58 for better fiscal management and for more employment opportunities for the youth. Central Plan assistance to the states would also go up if retirement is brought forward. More money will be available for health and social sectors and infrastructure building, government sources said.
The finance ministry in a note to the government had, however, warned that if retirement age is reduced to 58, lakhs of employees would retire instantly, entailing an outgo of Rs 25,000 crore. Sources said the decision should “not be taken in a huff” as it would upset fiscal management.
Those against bringing down the retirement age also argue that the global trend, except for pockets in Africa, is for enhancing it with the corresponding increase in average human life span.
Sources said the talk about putting a cap on DA was aimed at the Supreme Court. They added that the government wanted to tell the apex court it had no money to implement its directives and needed more time.
Because of the huge backlog of cases, the court had directed the states and the Centre to increase the number of judges in various courts from the current 13.8 per million to 50 per million which is at par with the UK. Rs 14,000 crore is required to implement the court’s directive.
The court had in March also directed the government to implement the report of the National Judicial Pay Commission for district and subordinate judges and presiding officers who number about 43,000.
One of the recommendations was increasing the salary and allowances of these officers at par with the Fifth Pay Commission report.