Chandigarh MC dips into pension pool to release salaries on Holi
With mounting liabilities, Chandigarh MC has failed to disburse salaries to its regular employees on time; typically paid by the 30th or 31st of each month, February salaries have still not been paid
Dropping the plan of taking a loan from government institutes or private banks, the cash-strapped Chandigarh municipal corporation (MC) on Thursday decided to use a total of ?50 crore from its employees’ pension fund to disburse the pending salaries of its regular and outsourced staff on Holi.
The corporation had been banking on the administration for additional grants to pay off its mounting liabilities estimating ?200 crore as Punjab governor and UT administrator Gulab Chand Kataria, on February 22, had assured to transfer surplus funds from UT’s annual budget for FY 2024-25 to the civic body after the Centre’s approval. While Kataria had said that any announcement or allocation of funds will likely be made around March 15, the MC has not got any confirmation as on Thursday, forcing the MC to look for alternative ways to pay its employees.
With mounting liabilities, the MC has failed to disburse salaries to its regular employees on time. Typically paid by the 30th or 31st of each month, February salaries have still not been paid. The civic body employs 9,748 personnel, including 6,965 outsourced workers. Of its monthly expenditure, ?26 crore is allocated for outsourced staff wages, while ?16 crore is required for regular employees. The salaries of outsourced staff, usually disbursed by the 7th of each month, remain unpaid as well.
Struggling to meet other liabilities
Apart from salaries, the MC is also struggling to meet other financial obligations, including pensions, utility bills, maintenance work, and fuel expenses. Development projects in Chandigarh have remained stalled since May 2024, with no new tenders floated since then.
Till Wednesday, MC was considering taking a ?50 crore loan and had already initiated talks with government institutions and agencies, including the Chandigarh Housing Board, and banks to secure loan at the lowest possible interest rate. According to MC officials, loans from government institutions could entail around 8% interest, while some banks may offer cheaper rates. MC was also planning to pledge collateral, any property or asset, against the loan.
Will transfer money back as soon as annual grant comes: Mayor
“On Thursday, the officials decided to withdraw ?50 crore from employees’ pension fund, of the total ?96 crore, to pay the salaries of the staff. The procedure has been started and all employees will get their salaries by Saturday evening. The amount has been withdrawn only for a few days and we will transfer back the funds, with interest, as soon as the grant-in-aid for the fiscal year 2025-26 starts is disbursed in April. MC is making every possible effort to secure additional funds from UT administration and central government and though it is taking time, we will definitely come over the financial crisis. The MC is facing an acute crisis due to AAP’s mayor Kuldeep Kumar Dhalor’s mismanagement of funds last year,” said city mayor Harpreet Kaur Babla.
Municipal commissioner Amit Kumar said, “We were considering taking loans but loan was being offered at 8% to 10% of interest rates, which we can’t afford. To avoid heavy interest, we decided to use employees’ fund amount to pay salaries as we wanted staff to get salaries on Holi festival. We will repay the amount from next fiscal’s grant.”
It is worth mentioning that last week too, the civic body had to withdraw ?6 crore from its employees’ pension fund to settle pending electricity bills for the Kajauli Waterworks. This move, aimed at avoiding a ?11 lakh penalty for late payment.
