Pension growing faster than pay
PENSIONERS ARE bigger drain on the State exchequer than the serving employees. Rise in average age of Indians has not-so-good spin-off for the State Government that is compelled to provide for ever-increasing amount on pension in its budget.india Updated: Feb 24, 2006 15:31 IST
PENSIONERS ARE bigger drain on the State exchequer than the serving employees. Rise in average age of Indians has not-so-good spin-off for the State Government that is compelled to provide for ever-increasing amount on pension in its budget.
Interestingly, the growth rate of pension is higher than that of salaries. Against 8.57 per cent growth in salaries, pension liabilities are increasing at the rate of 9.58 per cent.
Against pension payment of Rs 843.95 crore in 1998-99, the State Government paid Rs 1082.67 crore in 2002-03 while the budget estimate for the year 2006-07 stands at Rs 1766.37 crore for this head.
Which means pension amount has doubled in eight years and is galloping! The Medium-Term Fiscal Policy statement presented with the budget says that the pension liabilities which are 1766.37 crore for 2006-7, are likely to increase to Rs 4050.57 crore in 2015-16.
On an average over 10,000 employees retire every year. With the ban on fresh appointment, the State Government managed to save a sizable amount but the retiring workforce has grossly upset the calculation.
With the ban on fresh appointments in the past one decade, the financial health of State had started showing signs of improvement, as spending on new recruits was reduced drastically.
“Pension liabilities are increasing at the rate of 2 to 3 per cent higher than expenditure growth, which is a cause of concern”, admits a senior official of Finance Department. On yearly basis, an additional Rs 200 crore is provided for pension liabilities.
The State is already struggling hard to meet increasing pension liabilities of its retired employees. That is why the Government deprived the retired employees of their dearness relief.
To curb further growth in pension liabilities, the Madhya Pradesh Government introduced ‘pension reforms’ but we have to wait for its results for three decades because the reforms were introduced last year only, the officer added.
“Pensions have grown at a steady rate of 9.58 per cent despite lower dearness relief. This is mainly because of increasing life expectancy,” said the Macroeconomic Framework Statement presented by the State Government with the budget.
(Projections made by the Finance Department, presented in the Medium Term Fiscal Policy Statement presented along with the budget)