Indian Railways is expected to announce dearness allowance (DA) and a productivity-linked allowance (PLA) for its employees shortly.
While DA is directly linked to the rate of inflation and is expected to be in the range of nine per cent, PLA is the yearly bonus given during the festive season of Diwali, based on the organisation’s performance, measured through the net tonne km traffic per head. After taking into account staff cost of Rs 4,127.36 crore, inclusive of a Rs 3,013.22-crore outgo on DA payment, the railways had budgeted a surplus of Rs 5,258.41 crore for 2011-12.
According to a senior Railway Board official, “The railways have budgeted for seven per cent of DA in two instalments this year — for January and July. In the first half of the year, we actually gave six per cent DA, though provisioning has been made for seven per cent. So, the railways had a saving of one per cent of DA for a span of 15 months. So, even if we have to go for DA of more than seven per cent, we can sustain 1 to 2 per cent hike.” The first DA in a year is announced in April and the employees are paid that for 15 months i.e. from January to March next year. The second DA is announced around September and it is paid for nine months, i.e., from July to March next year.
With every one per cent increase in DA, the railways need to shell out Rs 183 crore. Another official, however, disputed the point that the railways would be able to survive the surplus, saying it would end with a deficit. The deficit happens every 10 years due to the implementation of Pay Commission recommendations for central government employees. During the Fifth Pay Commission, for instance, the railways were in a deeper crisis and had to defer the annual dividend to the government. The situation stabilises after two to three years, but after the Sixth Pay Commission, the Indian Railways is taking longer to stabilise itself as Rs 74,000 crore from its reserves was shelled out to pay the arrears after the pay commission recommendations. Besides, stagnating passenger fare was a cause of concern, he said.
The official said a source of relief was the Railway Convention Committee decision to lower dividend payout for this year to five per cent against six per cent in the last two years. With this, the railways have got a financial relief of Rs 1,100 crore. This will bring down the outflow of money by Rs 1,122.45 crore from the budget projection of Rs 6,734.72 crore.
