Sixth Pay Commission: Burden to go up Rs 4,000-5,000 cr

It is good news for two million employees of the Maharashtra government as senior officials of the state government have indicated that the state will implement the recommendations of the Sixth Pay Commission without much fuss and delay. But, this means the state exchequer takes a hit of around Rs 4,000 crore to Rs 5,000 crore.

The confidence of senior state government officials arose from the booming economy and buoyancy in the tax revenues who had a horrid time while managing the state's finances at the time of the implementation of the Fifth Pay Commission report.

Earlier this week by going on a one-day token strike, by both the Centre and state government employees, for implementation of the Sixth Pay Commission recommendations, unions have managed to bring the issue to the fore.

With the shadow of the mid-term poll looming large over the Centre, it is expected that the announcement of the acceptance of pay commission's recommendations by the Centre will be done sooner than later.

However, the implementation of the Fifth pay commission broke the back literally of many state government's finances and they had to divert funds from development projects for paying wages, salaries and pensions of government employees.

Speaking to Business Standard a senior official from chief minister's office said, "After implementation of Fifth Pay Commission's report, state finance had taken a massive hit as during the period between 1999 to 2003, we even had to cut our plan expenditure on various infrastructure and social sector projects."

However, the state had to cut down on development projects to pay employees because revenues didn't kept pace with the increase in expenditure on employees.

This primarily happened as economy was going through recession and tax collection was not showing any significant rise. However since 2003 economy has done the turn around and our tax revenues are soaring.

Revenues from stamp duty and registration alone have increased from around Rs.2,500 crore in 2003-04 to Rs 6,000 crore in 2006-07. This is despite reducing the stamp duty from average of 10 per cent to 5 per cent, he pointed out.

Besides, this we have also maintained tight leash on the expenditure side and reduced expenditure on non-planned heads from high of around 45 per cent in 2003-04 to around 38 per cent of the total budgetary outlay.

Maharashtra government did not have to do any off-budget borrowings since 2005-06.

So, we feel even if there is a burden of between Rs 4,000 crore to Rs 5,000 crore, the state will be able to absorb it provided the sixth pay commission recommendations are implemented from January 1, 2007 and not from January 1, 2006 as demanded by the employees union, he said.

It is always better that the state accepts the principle of implementing the pay commission's recommendations to state government employees as well and follow it than face strikes, dharnas and morchas from each government department for an increase in the salaries and pensions and bring the administration to a grinding halt, he pointed out.