 "Measuring the impact of pay hikes")
Last week, the Centre accepted the recommendations of the Seventh Central Pay Commission, which had suggested 23.5 per cent hike in salary and allowances, and 24 per cent hike in pension of central government employees. The focus has now shifted to states - whether they would implement a similar pay hike for their employees or not. However, financial as well as political dynamics of each state are different, writes, Ishan Bakshi.
While the exact quantum of state-wise hike and its impact on state finances is not known, a YES Bank study on the potential impact of Pay Commission hikes on state finances suggests that Kerala and Punjab are the most vulnerable to such revisions. On the other hand, Gujarat and Jharkhand are likely to have the least difficulty in bearing this extra financial burden. West Bengal and Maharashtra, despite having fewer public sector employees, are likely to face a higher burden of salaries and pensions.
According to the study, West Bengal, Tamil Nadu, Punjab, Uttar Pradesh and Odisha have asked the Union government "to go slow on the implementation of the Seventh Central Pay Commission recommendations, so that they get more time to equip themselves with resources to meet higher salary bills." Business Standard takes a detailed look at the impact of the Central Pay Commission hikes on 12 key states.
States with over 2.5% fiscal deficit
