Himachal Pradesh’s economy is set to be pressed further by an additional salary and pension burden of around Rs 1,200 crore after implementation of the Seventh Pay Panel recommendations, which were approved by the Union cabinet for central government employees on Wednesday with a 23.55% average hike.
However, with states now bound to follow, the exact quantum for Himachal will be known only after Punjab implements the panel’s report, as it follows the neighbouring state in determining salaries of government staff. What is worrying Himachal more, is that when the Sixth Pay Panel had been implemented, Punjab had given hikes over and above the panel recommendations. This time, since Punjab is due to go to assembly polls early next year, it would likely again dole out extra incentives.
According to the last count, in 2013, the number of employees in Himachal stood at 2.26 lakh, of which 1.84 lakh (81.6%) were regular and the rest on contract. In the state budget, the projected revenue for the ongoing fiscal is Rs 26,270, which is projected to grow to Rs 34,685 crore by 2019-20. But the expenditure-estimated for this fiscal is Rs 26,745 crore, of which nearly half is salary bill at over Rs 13,000 crore.
The expenditure is projected to grow to Rs 38,038 crore by 2019-20, leaving a deficit of Rs 3,300 crore. This revenue deficit, which was supposed to decrease with higher allocation of a Revenue Deficit Grant (RDG) from the Centre (around Rs 8,000 crore a year), would be close to 9%.
A senior official, requesting anonymity, said that the state had already done the calculations for a situation in which Punjab implements the recommendations as they are; and the additional cost thus would be Rs 1,200 crore annually. This is less if one goes by the 23.55% average hike, but the state is already paying some salary components, such as dearness allowance, at rates higher than those now recommended.
HP finance secretary Shrikant Baldi simply said, “We follow the Punjab pattern and our finances will be affected depending on the way it implements the pay panel’s recommendations.”