7th Pay Commission: Maharashtra may have to initially spend Rs 18,000 cr

The state annually spends over 36% of its revenue expenditure on paying salaries to its 1.7 million employees

The cash-strapped Maharashtra government might have to shell out Rs 18,000 crore initially to implement the 7th Pay Commission recommendations, which will cover its 1.7 million employees.

“The proposed one-time outgo of Rs 18,000 crore is a preliminary estimate. Justice AK Mathur has submitted his report to the Centre, which is yet to accept the recommendations. After the Centre gives its nod, the states will take them up for consideration. The Maharashtra Cabinet will hold a series of deliberations before giving its approval. The annual outgo may be in the range of Rs 5,000-6,000 crore. The final picture will be clear in due course of time,” Maharashtra Finance Minister Sudhir Mungantiwar told Business Standard.

Mungantiwar was responding to a 23.55 per cent hike in pay recommended for central government employees by Justice Mathur in his 7th Pay Commission report, which was submitted to Finance Minister Arun Jaitley yesterday. Within this, the increase in pay will be 16 per cent, 63 per cent in allowances and 24 per cent in pensions.

PAYOUT

• Justice AK Mathur recommended 23.55% hike in pay for central government employees
   
• Annual outgo of the state might be in the range of Rs 5,000-6,000 crore
   
• There would be 16%, increase in pay, 63% in allowances and 24% in pensions if recommendations are accepted
  

 

After the Centre gives its nod to the recommendations, states would take them up for consideration
 

State govt’s salary bill is estimated to increase to Rs 80,000 crore in 2015-16 from Rs 65,957 crore in 2014-15
 

State’s debt burden has mounted to Rs 3,50,000 crore

According to the state finance department, the Maharashtra government’s annual outgo on salaries was Rs 65,957 crore for 2014-15, which was 35.8 per cent of its total revenue expenditure. The state government’s salary bill is estimated to increase to Rs 80,000 crore in 2015-16. Besides, the government spent Rs 17,633 crore on pensions in 2014-15, which was 9.6 per cent of the total revenue expenditure, and this is expected to cross Rs 18,000 crore in 2015-16.

The Maharashtra government’s salary outgo has been increasing since 2010-11. It was Rs 41,346 crore in 2010-11 which increased to Rs 45,467 crore in 20111-12, Rs 53,295 crore in 2012-13 and Rs 60,687 crore in 2013-14. Further, the government spent Rs 9,886 crore on pensions in 2010-11, Rs 11,682 crore in 2011-12, Rs 13,430 crore in 2012-13 and Rs 15,608 crore in 2013-14.

The state’s debt burden has mounted to Rs 3.50 lakh crore. This has resulted in a steady rise in interest payments. The Maharashtra government in its budget for 2015-16 had estimated a revenue deficit of Rs 3,757 crore, but this may rise to Rs 15,000 crore by the end of current fiscal year on account of the 7th Pay Commission report and expenditure on relief and rehabilitation in calamity-hit regions.