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GST fallout: Punjab government unable to pay salary to its employees

Debt-ridden Punjab government was not able to pay salary of its employees on Friday due to non-availability of funds. Salaries for government staff are paid on the first of every month. This time, sources say, it could take at least a week. The government plans to clear the salary bill in three-four instalments.

Having a fat salary bill of Rs 2,200 crore per month for its 3.5 lakh employees, Punjab has been paying salaries from VAT collections worth Rs 1,400 crore and from state’s share of Rs 700 crore in central taxes every month. But after implementation of GST, the VAT has been subsumed. Sources said as per the new rules, the GST would be paid to the state in quarterly instalments. It expects its instalment not before September 20. Similarly, the state’s share in Customs duty and Income Tax is not expected before September 15.

Sources said the state had pending bills worth Rs 5,000 crore of the development works started by the previous government. The Congress government, after taking over in March, had stopped all works and also the payments to the contractors. The bills have been piling up. Therefore, the government allowed Rs 900 crore as Ways and Means Advance has already exhausted the limit. This is the second time in last five months that the government is facing a fiscal situation.

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