This will lead to an average rise of 23% in their salary from January 1, 2019, when the new recommendations come into force.
In a huge populist measure before the 2019 Lok Sabha and State Assembly polls, the Maharashtra cabinet on Thursday cleared the decks for granting Seventh Pay Commission benefits to 20.50 lakh government employees and pensioners. This will lead to an average rise of 23% in their salary from January 1, 2019, when the new recommendations come into force.
However, the pay hike will strain the already-burdened state exchequer. Even before the pay commission recommendations were accepted, its debt was expected to rise to a whopping Rs 4.61 lakh crore by the end of the 2018-19 fiscal. This additional expense on salaries and pensions and increased debt servicing costs may lead to outlays for developmental works being affected.
The state has already announced Rs 34,034 crore farm loan waiver.
The Seventh Pay Commission recommendations will come into effect from January 1, 2019. This will cover arrears from January 1, 2016. The arrears of Rs 38,655 crore will be paid in five equal annual instalments in cash (to pensioners) and serving employees (addition to the provident fund) from 2019-20.
Maharashtra finance minister Sudhir Mungantiwar said the Pay Commission’s implementation would lead to an additional annual financial burden of Rs 24,485 crore on the state exchequer, including Rs 2,580 crore as HRA and 7,731 crore as arrears. Finance department officials said that an amount of Rs 2,200 crore plus Rs 430 crore as additional house rent allowance would be paid in the last two months of the current fiscal and the remainder in 2019-20.
Mungantiwar added that the state’s debt stock could rise to Rs 4,61,807 crore by March 31, 2019. This was 16.52% of the gross state domestic product. In 2014-15, the figure was Rs 2.94 lakh crore (16.52 per cent of GSDP), which rose to Rs 3.24 lakh crore (16.32%) in 2015-16, Rs 3.64 lakh crore (16.16%) in 2016-17 and Rs 4.06 lakh crore (16.30%) in 2017-18.
“We are trying to control the financial outgo on salaries and pensions. Attempts are being made to increase the income generation to prevent expenditure on developmental works being restricted,” said Mungantiwar. In 2017-18, the expenditure on salaries and wages was Rs 1,08,080 crore, which rose to Rs 1,14,000 crore in 2018-19.
“The state spends less than 50% of its income on salaries and pensions, which is lower than the 56 to 58% earlier,” he added. In 2018-19, the state’s income from all sources is estimated to be Rs 3,38,920 crore.
The salary arrears which will be paid into the Provident Fund of serving employees in five annual instalments will be locked in for a period of two years.
Subhash Gangurde of the Maharashtra Rajya Sarkari Karmachari Madhyavarti Mahasangh, claimed that the hike was a pittance. “This is meagre considering it is coming after 12 years. Prices of essentials have doubled during the period,” he said.
G.D Kulthe, general secretary, state government gazetted officers union, sought their pending demands for a five-day week and increasing the retirement age from 58 to 60 years. Kulthe added that 1.80 lakh vacant posts in the state government will be filled to ensure jobs for the youth. Six states have already implemented the five-day week system. The unions have called for a day-long strike on January 5.
Money Matters
- Recommendations will come into effect from Jan 1, 2019
- 23 per cent average hike in salaries of state govt employees and pensioners
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