Faced with acute financial crunch, the central government for the first time may not be able to disburse the salary for February 2005 to its employees.
According to official estimates, the shortfall is to the extent of Rs 500 crore. Although officials in the department of expenditure disputed the amount, they grudgingly admitted that there is a problem.
With just weeks to go before the presentation of the Union Budget for 2005-06, the development may lead to many red faces in the United Progressive Alliance government.
Officials say that the crisis is a result of the delayed impact of the decision taken last year by the erstwhile National Democratic Alliance government to merge 50 per cent dearness allowance with basic pay of the central government employees.
After the UPA government assumed office, the department of expenditure failed to anticipate and pay heed to the impending crisis even after financial advisors of some key ministries hinted at such a possibility at a meeting in September 2004.
The department of expenditure, however, chose not only to ignore the warning but also rejected the possibility of such a crisis. Two financial advisors from important ministries found themselves sidelined for painting a bleak picture.
Following the merger of 50 per cent DA with basic pay, the pro-rata impact of allowances like house rent allowance, dearness allowances -- including the second instalment -- greatly stretched the government finances.
This also had a cumulative impact on non-Plan salary heads. Financial advisors from 56 different government departments have taken up this issue with the finance ministry, which is now looking into the matter.
Officials says that finance ministry mandarins are working overtime to get extra-budgetary allocation to meet the financial emergency and pay central government employees February salary in time.
Meanwhile, Finance ministry officials, when contacted, claimed that there was no such crisis.
