Ahead of the festival season, the government on Tuesday decided to release the second and last installment of salary arrears to government servants numbering about 50 lakh (5 million) which will put a burden of over Rs 17,500 crore (Rs 175 billion) on the exchequer.
Pensioners will also get their final installment of arrears. Remaining 60 per cent of the total arrears have to be paid as the government implemented the new pay scales with effect from January 1, 2006 after the 6th Pay Commission report was approved by the Cabinet with modifications.
The first installment of 40 per cent of the total arrears was paid during the last fiscal.
"It has now been decided that the remaining 60 per cent of the arrears may now be paid to the concerned government servants," said a finance ministry memorandum.
The memorandum is, however, silent on the date for payment of the final installment of arrears.
According to the government calculations, the total arrears are estimated to cost Rs 29,373 crore (Rs 293.73 billion) to the government kitty.
The memorandum further said that the government servants are encouraged to deposit their arrears in general provident fund (GPF) account.
"As in the case of the first installment of the arrears, government servants would be permitted to deposit their arrears in their GPF accounts," the memorandum said.
The government in August last year had decided to pay the arrears in two installments of 40 per cent and 60 per cent.
The memorandum further said for employees, who have joined the service after January 1, 2004, the second installment should be released only after ascertaining that they have joined the new pension scheme.
The government had accepted the recommendations of the Sixth Pay Commission with modifications following representations from various associations and government departments.
