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Union Cabinet approves ordinance to pay salaries by cheques

The Union Cabinet has approved a draft ordinance to empower states and allow industries to pay workers’ wages digitally, through a direct bank transfer to accounts or by cheque in a bid to encourage cashless transactions.

The draft ordinance proposes changes to the Section 6 of the Payment of Wages Act, 1936 to encourage cashless transactions. It will need the President’s assent to become law as per article 123 of the Constitution.

Key Facts
  • It will allow industries to pay wages to workers earning up to Rs. 18,000/ month, without taking their explicitsalary consent as required under present Act.
  • However, wage payment through the banking system will only be optional, until State governments or Union Government come up with a notification for specific industries since Labour is in the concurrent list.
  • The present law (1936 Act) states that all payment of wages should be in cash. Under it has mandatory provision asking employers to obtain written permission of the worker to pay either by cheque or by crediting wages to his or her bank account.
Comment

The payment of wages through cheque or DBT of employed persons has twin motives  i.e. it will reduce complaints regarding non-payment or less payment of minimum wages and serve purpose of digital and less cash economy. The move is significant in view of the Union Government is promoting cashless transactions after its decision to scrap the old high value Rs. 500 and Rs. 1,000 currency notes. Earlier Payment of Wages (Amendment) Bill, 2016 introduced in the Lok Sabha during 2016 winter session but was not cleared owing to the impasse in Parliament.

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CCEA approves winding up of Hindustan Diamond Company Private Limited

The Cabinet Committee on Economic Affairs (CCEA) has given its approval for initiating the process of winding up of Hindustan Diamond Company Private Limited (HDCPL).

The winding up of HDCPL will not affect supply of rough diamonds to Indian diamantaires as Indian diamond industry has grown in these years.

Besides, the HDCPL had become inconsistent with changing times to facilitate the constant supply of rough diamonds and to make India an International Diamond Trading Hub.

About Hindustan Diamond Company Private Limited (HDCPL)

  • HDCPL was a 50:50 joint venture of the Central Government and De Beers Centenary Mauritius Limited (DBCML).
  • It was incorporated under the Companies Act, 1956 in 1978 to supply rough diamonds to diamond processing industry in India.
  • Its objective was to supply rough diamonds particularly to small and medium diamond jewellery exporters, who had no direct access to rough diamonds from Diamond Trading Company (DTC), London.

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Union Cabinet approves advancement of the Budget presentation

The Union Cabinet has given in principle approval for advancement of the date of Budget presentation from the last day of February to a suitable date.

Besides in another reform relating to budgetary process, Union Cabinet has approved merger of Plan and Non Plan classification in Budget and Accounts.

Advancement of the date of Budget presentation

Benefits

  • Pave way for early completion of Budget cycle and enable Central Ministries and Departments to ensure better planning and execution of schemes from beginning of financial year.
  • It will also enable Central Ministries and Departments to ensure better utilize the full working seasons including the first quarter of the year.
  • It will preclude the need of appropriation through ‘Vote on Account’. It will enable implementation of legislative changes in tax and laws for new taxation measures from the beginning of financial year.

Merger of Plan and Non Plan classification in Budget and Accounts

The Union Cabinet also approved proposal of Union Finance Ministry to do away with the Plan and Non-Plan expenditure classification from 2017-18and replace with ‘capital and receipt’.

The relevance of plan and non-plan expenditure was lost after the abolition of the Planning Commission.

However Budget will continue earmarking funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan and similarly, the allocations for North Eastern States.

Plan/Non-Plan will help in resolving the following issues

  • This distinction of expenditure had led to a fragmented view of resource allocation to various schemes.
  • It had made it difficult to ascertain cost of delivering a service and also to link outlays to outcomes.
  • It had led to bias in favour of Plan expenditure by Centre as well as the State Governments and had neglected essential expenditures on maintenance of assets and other establishment related expenditures to provide essential social services.
  • The merger is expected to provide appropriate budgetary framework that will have focus on the capital and revenue expenditure.

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