‘Internal loan’: Civic bodies have dipped into staff PF to pay them salaries

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The civic bodies, by their own admission, do not have the authority to touch the provident fund of employees, but count their action as a ‘last resort’ due to lack of sufficient internal income and governmental grants.

“I know we cannot do this. There is no such provision in the Delhi Municipal Corporation Act, but the government has left us with no options. They claim we are running a salary scam but our condition is such that we have to borrow from our employees’ savings,” said North Delhi mayor Ravinder Gupta.

Emphasising that the corporation has never faced such a situation before, Gupta added, “We never faced a fund crunch during the Congress (government’s tenure). If there was ever a budget deficit, the Congress government gave us a loan which was subsequently deducted. Mitigation of the current crisis is the responsibility of the state government.”

The corporation is yet to return this “internal loan”. Officials say the amount will be given with interest to the employees PF accounts.

Officials in the East corporation state the civic body has taken Rs 300 crore from fund accumulated from road restoration and security paid by contractors, even as scores of contractors remain unpaid despite completion of projects. Many employees in both corporations are also resorting to taking advance payments on their PF in the absence of regular paychecks.

According to Gautam Bhardwaj, an expert on EPF matters, the “internal loan” move of the civic bodies is illegal. “Withdrawing funds from the employee’s provident fund is illegal and they cannot use it for any other purpose. Not even to provide salaries,” he said.

Former Delhi mayor (under the unified MCD) and currently leader of the opposition, Farhad Suri, said that both North and East corporations have borrowed significantly from their general provident fund and “both taking the money from the fund or not contributing to the fund are totally illegal.”

Incidentally, employees concerned are aware of the “borrowing”, but claim they are not in a position to question their employers. “We know that they have been taking money from our fund to run some schemes, but if they cannot even pay us salaries, what more can we expect from them?” said Rajendra Mewati, general secretary of the United Forum of MCD employees.

For the next fiscal, the East civic body has projected a budget deficit of Rs 2,100 crore and the North civic body, a deficit of Rs 2,700 crore. Both corporations claim all internal income has been diverted toward paying salaries to employees, since the financial crisis began in February 2015. The annual salary bills of the North corporation are to the tune of Rs 2,700 crore. For the East corporation, it is Rs 1,224 crore.

Corresponding government grants, in the current financial year, to both corporations are 890 crore and Rs 465 crore, respectively. With the burden of the implementation of the Seventh Pay Commission, the corporations claim they are in no position to pay dues to their employees.