States struggle to pay staff who demand salaries in cash

In Kerala, where most payment to govt staff is routed through bank or treasury accounts, finance minister Thomas Isaac has declared that payments will be affected


Maharashtra has rejected a demand by government employees for two months salary in cash. Photo: Reuters
Maharashtra has rejected a demand by government employees for two months salary in cash. Photo: Reuters

Bengaluru/Hyderabad: Short of currency notes and under pressure from staff to be paid in cash, states across the country are scrambling a day before the first post-demonetisation pay cheque falls due.

In Kerala, where most payment to government staff is routed through bank or treasury accounts, finance minister Thomas Isaac has already declared that payments will be affected.

“The state government will not able to disburse salaries and pensions routed through treasury accounts. We need Rs1,200 crore to give salary and pension through the treasury. We will not be able to disburse salaries if the RBI (Reserve Bank of India) doesn’t give enough cash. Our finance secretary is meeting officials of nationalised banks and RBI today,” he said on Wednesday.

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State governments are also having to contend with employees asking to be paid in cash. While some like Karnataka and Maharashtra have ignored such demands, others like Telangana, Tamil Nadu, West Bengal, Haryana and Jammu and Kashmir have agreed to pay part of the salaries in cash. But state governments that have made such promises are feeling the heat.

For instance, in Telangana, the state government has promised to pay Rs10,000 out of the November salaries to government employees and pensioners in cash to “mitigate their hardships.” But with a day to go to make that payment, no one knows how things will pan out.

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“Things haven’t eased yet, there is still a cash crunch, we are in constant touch with the Union finance ministry, RBI and banks to ensure the cash is available,” said an official at the Telangana finance department, who did not want to be named.

In West Bengal, the government had promised to pay up to Rs5,000 in cash to its group C and D employees as an advance against their December salary to help them tide over the cash crunch. For this, the government had also asked the Kolkata office of RBI and other public sector banks to supply Rs200 crore in cash in notes smaller than Rs2,000 to pay an advance to nearly 400,000 employees, Mint reported last week. But it is not clear yet how much RBI will be able to provide to the state government. The state government says it will continue to receive applications until 7 December for salary advances.

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In hindsight, officials in states like Karnataka think they have made the right decision in rejecting such demands, despite risking the wrath of the unions.

Maharashtra has rejected a demand by government employees for two months salary in cash. Last week, the Maharashtra State Government Employees’ Central Federation had demanded that nearly 1.35 million people employed in government and semi-government jobs be paid Rs10,000 in cash each, as advance salary for November.

Arkamoy Dutta Majumdar from West Bengal, Dharani Thangavelu from Tamil Nadu and Abhiram Ghadyalpatil from Maharashtra contributed to this story.

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