State finds itself tied up in knots | india | Hindustan Times
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State finds itself tied up in knots

THE TIME is nearing once again for the cash-starved State Government to spend more on the salaries of its employees. If the Sixth Pay Commission recommends that the salaries of the Central staff should go north, the State Government?s would also have to prepare itself for a similar hike for its employees despite its poor fiscal health.

india Updated: Jul 21, 2006 01:25 IST

THE TIME is nearing once again for the cash-starved State Government to spend more on the salaries of its employees. If the Sixth Pay Commission recommends that the salaries of the Central staff should go north, the State Government’s would also have to prepare itself for a similar hike for its employees despite its poor fiscal health. And to meet the increased expenses, the State Government would have to look for new avenues to mobilise additional resources.

The State Government is already spending more than 50 per cent of its revenue receipts on the payment of interest on borrowings, pension and salaries.

Till recently, the State Government had been spending nearly 80 per cent of revenue receipts on payment of interest on borrowings, pension and salaries.

This had come down considerably following an improvement in fiscal situation of the State Government, said principal secretary Finance Shekhar Agarwal while speaking to Hindustan Times here today.

Agarwal, however, refused to comment on the possibilities that may arise with the Centre setting up the Sixth Pay Commission. “The question is premature,” he said. Various organisations of State Government employees have been demanding setting up of the Sixth Pay Commission. There was jubilation among employees as news about the Centre’s decision to set up the commission began doing rounds in the corridors of power here.

The State Government would have no option but to implement the Sixth Pay Commission recommendations once its report was submitted to Centre, they said.

State Employees’ Joint Council welcomed the decision and thanked Prime Minister Manmohan Singh. He demanded that the recommendations of the commission should be implemented from January 1, 2006. The Employees-Teachers Coordination Committee also welcomed the move. Both the organisations have demanded an interim relief immediately.  

Significantly, the State Government had reluctantly implemented the Fifth Pay Commission recommendations on the grounds that it would have an adverse impact on the State’s financial situation. As per estimates, the State Government was spending a sum of nearly Rs 24,000 crore per annum on the payment of salaries and pension etc and the amount keeps on going up every time it released an installment of DA.

As far as the financial situation was concerned, the total borrowings of the State Government would go up to Rs 1,37,914.92 crore at the end of 2006-07.

Total borrowings may even reach Rs 1,80,653.56 crore if the present trend continues at the end of 2009-2010.

There is, however, light at the end of tunnel. There are indications that the total borrowings of State Government would be 47.9 per cent of the GSDP at the end of 2006-2007 as compared to 50.2 per cent at the end of 2004-2005 and 49.2 percent at the end of 2005-2006.