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State spends more on salaries, pensions

The state government is spending more than half of its income on salaries, wages and pensions of its staff.

mumbai Updated: Mar 23, 2011 01:41 IST
Dharmendra Jore

The state government is spending more than half of its income on salaries, wages and pensions of its staff.

The expenditure on the establishment is expected to shoot up to 53.3% of the revenue receipts in 2010-11.

Apart from this, the amount of interest payments, which is steadily increasing every year, will consume another 17% of the state’s total earnings.

This means the government will barely have 30% of its income to spend on building infrastructure, encourage agriculture and industries and fund welfare schemes for children, women and the poor.

This year, the state expects to make Rs97,044 crore in revenue receipts and spend Rs1,04,698 crore of which the bulk would go on salary, wages and pension payments.

This, however, is not good news for the state that reels under a debt of Rs2,09,648 crore.

The economic survey that was published on Tuesday said the amount of interest payments was steadily increasing though the cost of borrowing had declined. This year, the state will pay Rs16,469 crore in interests (17% of the revenue receipts) and Rs51,740 crore in salary, wages and pensions.

However, chief minister Prithviraj Chavan told the assembly on Monday that the debt was within the prescribed limit and the state had the money to service all loans comfortably.

However, the Opposition claimed that the state was heading towards economic doom. “The picture may look good at the macro level, but when we have a micro look, it appears pathetic," said Bharatiya Janata Party legislator Devendra Fadnavis.

He said the debt was not a problem for any developing economy, but what mattered most was wise investment (of debt). “We did not spend our loans on creating assets that would give us good and steady returns,” he said.

The expenditure on salary, wages and pensions was as low as 34.6% in 2007-08 and at an all-time high of 65-70% between 1998-2001.

Later, some economic reforms saw the government move over to surplus. But it returned to deficit a couple of years ago due to global recession and high inflation.

Despite these challenges, the government was able to prepare the highest ever annual plan of Rs37,916 in the year 2010-11.