Bankrupt govt tightens belt, staff feel the pinch

The cabinet unanimously decided to cut drastically the heavy financial burden of the employees’ payments. The major decision was about delinking dearness allowance (DA) from salary a reversal of the decision taken by then Congress government led by Sharad Pawar in 1978. As per the decision, state government employees are paid salaries and allowances as per the pay scales of the central government. Today’s decision means that the government employees will no more enjoy dearness allowance as per their Central Government counterparts.

Henceforth, the state government will decide the DA based on consumer price index every six months. It will be at the discretion of the government to decide the percentage of the DA or even not to pay it.

In the year ended 1999-2000, the government had made provision of Rs 570 crore for the payment of DA to its employees.

The cabinet also decided to freeze the bonus of its employees which was Rs 390 crore in the current year. Further, some other allowances will be cut which includes slashing the house rent allowance if husband and wife both are government employees.

The cash-strapped DF government is also seriously contemplating to reduce the expenditure on the Maharashtra State Textiles Corporation (MSTC). The cabinet deliberated on the financial health of the textile mills run by the MSTC and decided to assess the viability of the units. Four of the loss-making mills Deogiri, Kalmeshwar, Pratap and Pulgaon mills are likely to be closed soon. The accumulated losses of the four mills together was Rs 289.17 crore till March 31, 2000.

The cabinet also took several stern measures such as slashing the grant to Matoshri Niradhar Yojna, a scheme for providing old age homes. Instead, the government will revive an old scheme.

In a bid to augment the revenue, a decision was taken to impose vehicle tax at a flat rate of Rs 5000 per year on national permit holder transport vehicles, entering Maharashtra, from other states.

With a view to attract the industries to the state, the cabinet cleared the new industrial policy of the state under which several sops have been offered to the industries in backward areas with stress on the information technology sector.

The new policy stresses on diverting the growth of industries to backward areas from the developed Mumbai metropolitan region. It offers exemption in tax on electricity for 10 to 15 years for A, B, C, D and D + areas. The exemption will also be granted to 100 per cent export oriented units, IT units and the units in electronic hardware technology park and special economic zone. Earlier, the exemption was granted for 5 to 7 years.

The concession in stamp duty and registration fees for new units or expansion of old units has been extended upto 2006 instead of earlier 1998.

Under the policy the state government will make budgetary provision of Rs 200 crore to clear the backlog of about Rs 700 crore on reimbursement to the units on account of incentives.

The government will also continue the heavy sops which are being offered to the IT industry upto March 2006. This includes reducing sales tax on 150 products of the industry upto 4 per cent. For the next five years, the local sales tax rates will be on the lines of the central government rates and will be free from any type of cess or turnover tax.

A major recommendation of the policy is that the land held by textile mills in Mumbai metropolitan region should be made available to the IT industry instead of handing over to MHADA for residential purpose. It also offers for expulsion of industrial land from the provisions of the Urban Land Ceiling Act.

The cabinet, however, did not discuss the amendments in the labour laws which was part of the new industrial policy. The amendments in the Contract Labour Act, Trade Unions Act, MRUTP and PLUP Act, Industrial Disputes Act and Companies Act have already been opposed by the labour unions. The cabinet is likely to discuss the crucial issue on Thursday.