Dealing with the cut

Picture this – you come to office on a usual day and get to know that your employer has decided on implementing salary cuts. Panic not, as this is quite a common scene in offices these days and experts say that you can sail through it.

Most people argue that salary cuts are still better than being laid-off, but the fact also remains that it has its repercussions too. Experts say that no organisation wants to take such a decision unless it is absolutely unavoidable. “Pay reduction during times of recession is demoralising for employees and is the last step a company would ever take, after it has exhausted other cost-cutting measures,”

Where Rupee Comes from & goes

Big on Borrowings

The major part of the government's revenue comes from borrowings. Consequently, the biggest chunk of expenditure is on interest payments.

Out of every rupee that enters the government's coffers, 29 paise is from borrowings and other debt, with corporation tax contributing 22 paise and income tax another 12 paise.

"Custom"ized Gains

Of the remaining, customs and excise duties account for 10 paise each, with another 10 paise coming from non-tax revenue. Service taxes amount to six paise, while non-debt capital receipts contribute one paise.

Expenditure

On the expenditure side, 20 paise of each rupee spent is on interest payments. Then another 18 paise is on central plan outlay.
The central government has to give states 15 paise for their share of taxes and duties. Other non-plan expenditure accounts for 14 paise.

Defence accounts for 13 paise, while subsidies on food, fertilisers and energy costs nine paise.

Expenditure on state and union territory plan and non-plan assistance are seven and four paise, respectively.

COULD THIS BE THE SOLUTION TO THE Global Financial Crisis?

It is August. In a small town on the South Coast of France, holiday
season is in full swing, but it is raining so there is not too much
business happening. Everyone is heavily in debt.

Luckily, a rich Russian tourist arrives in the foyer of the small
local hotel. He asks for a room and puts a Euro100 note on the
reception counter, takes a key and goes to inspect the room located up
the stairs on the third floor.

The hotel owner takes the banknote in hurry and rushes to his meat
supplier to whom he owes E100.
The butcher takes the money and races to his supplier to pay his debt.
The wholesaler rushes to the farmer to pay E100 for pigs he purchased
some time ago.
The farmer triumphantly gives the E100 note to a local prostitute who
gave him her services on credit.
The prostitute goes quickly to the hotel, as she owed the hotel for
her hourly room use to entertain clients.
At that moment, the rich Russian is coming down to reception and
informs the hotel owner that the proposed room is unsatisfactory and
takes his E100 back and departs.

There was no profit or income. But everyone no longer has any debt and
the small town people look optimistically towards their future.

COULD THIS BE THE SOLUTION TO THE Global Financial Crisis? Or, is
there a catch here?

PERFORMANCE BONUS

HERE IS THE LETTER THAT GOES TO ALL OUR ASSOCIATES FROM MY DESK, SINGED BY OUR CEO.

Global Economic Slowdown created uncertainty and resultant cascading effects like job loss and wage reduction all over the world. Ours have not been immune to the crisis as our import business has dropped off drastically although there is a sign of recovery in recent times.

We are hopeful that we will be able to achieve our current year business targets as team by working aggressively to retain customers and seeking new business opportunities. Also we need to be more cost conscious in every decision that we take.

Under the circumstances, it made us to take decision to freeze on wage revision for the current year. However, recognizing the performance of each individual, we have considered the payment of bonus as per our policy on Performance Bonus.

We are pleased to inform that in recognition of your contribution during the year 2008 «PROMOTION» and you will be paid Rs. «BONUS» as performance bonus. This will be credited to your account on or before 30th May 2009 subject to the deduction of applicable taxes.

You shall not disclose your bonus details, either directly or indirectly to any other employee of the company as the same will have to be treated in strict confidence.

Thanking you for your ongoing commitment and contribution to strengthen our position in India.

Warm Regards

DOTTING THE “I” AND CROSSING THE “T”