Goa CM Pramod Sawant. (File photo)
Goa CM Pramod Sawant. (File photo)

Goa govt employees approach HC on withdrawal of housing scheme

Under the scheme, in force since 1988, the Goa governmentstood as a guarantorfor the loan granted to government employees, and offered a subsidy on the interest
By Gerard de Souza
PUBLISHED ON JUN 11, 2021 06:00 PM IST

About 400 Goa government employees have approached the high court earlier this month over the state government’s decision to “arbitrarily and unreasonably” withdraw House Building Allowance (HBA) scheme. This includes as many as 240 police personnel and a host of other employees -- from judicial officers to clerks.

Under the scheme, in force since 1988, the Goa governmentstood as a guarantorfor the loan granted to government employees, and offered a subsidy on the interest. Employees, depending on their rank, were eligible for housing loans of up to 36 lakh and the quantum to be admissible depended upon the employee’s length of service left and their repaying capacity at a concessional rate of 2% per annum. The difference between the rate charged by the bank and the interest at subsidised rate payable by the employee was borne by the government.

It worked out to approximately 19.70 crore per year for 1,955 beneficiaries.

Also Read | More relaxations in Pune from Monday if infection rate remains low

Through an order dated May 15, 2020, which was sent to all heads of departments, the government decided to withdraw/close the HBA extended to its employees without citing any reasons.

As a consequence, all those who had applied for and were granted the benefit, suddenly saw their easy monthly instalments recalculated according to the prevailing bank rate without any subsidy from the government.

The government also refused to entertain objections/representations from the employees claiming that was final but giving the employees the opportunity to transfer the load to a financial institution of their choice.

In effect the government employees who were repaying their housing loans at the rate of 2% per annum are now liable to pay an interest rate of 10.20% per annum.

After the employees approached the high court, the government upgraded the office order, and promulgated an ordinance to declare the scheme as withdrawn without giving any reason for the same.

“By unilaterally changing the rules of the game, without any opportunity and condemning the petitioners behind their back [causing] grave detriment and prejudice [that] the very livelihood of the petitioners is at stake,” the policemen said in their petition. The petitioners claim that the government breached its end of the contract by withdrawing the scheme after commitments were made.

The government had a deal with HDFC which agreed to disburse loans subject to the state government taking responsibility towards payment of the principal and interest to the bank at the rate of interest charged by it while the government would recover the principal and interest at its prescribed rate for HBA from the employees.

The high court has granted three weeks to the Goa government to reply.

The Opposition has demanded that the scheme be restored. “The government must be spending around 12 to 14 crore a month on the subsidy, which is a paltry amount. It could have enhanced the rate of interest on the scheme instead of doing away with the scheme,” Leader of Opposition and former chief minister Digambar Kamat said.

“Many of these employees have approached me and I find the decision of the state government to be highly unreasonable, based on incorrect assumptions, without any thought of welfare for its employees and most regressive,” he said.

The Goa government has, however, stuck to its guns despite the demands. Chief minister Pramod Sawant, had, however defended the decision, saying the scheme was essentially “complicated” but hastened to add that the government would come out with a one-time settlement scheme for those unable to pay their dues.

Story Saved