Payout to govt employees doubles in five years, strength shrinking

Establishment strength for latest years are estimates, which are usually scaled down to reflect the actual strength two years later

India's central government had 3.18 million employees in 2020, gradually reducing from 3.32 million in 2013, data released in the Union Budget 2022-23 shows. This generally falls in line with the first part of the "minimum government maximum governance" principle propounded by the current National Democratic Alliance government.

Though the strength of the central government is estimated to go up in 2021 and 2022 to 3.45 million, the actual number could be closer to the 2020 number of 3.18 million. For instance, the strength was stated as 3.45 million even for 2018, but was later revised downward. This has been the case for most years.

But if the number of government employees has risen on the one hand, salaries, emoluments and pensions to them has risen. In fact, it has doubled in five years from 2017 to 2022. If we include pay, allowances and travel expenses, and pensions to government employees, it has risen from Rs 3.44 trillion in 2017-18, to Rs 6.3 trillion in 2022-23 (Budget estimate).

While pay and allowances have more than doubled, pensions have risen from Rs 1.5 trillion to Rs 2.1 trillion. These expenditures are a part of the establishment expenditure of the central government.

Salaries and other payouts to government employees form a substantial part of the central government's total expenditure. For India, it stands at 16.4 per cent in the financial year 2021-22 (revised estimate). It is closest to how much the UK spends on its government employees.

Central or federal governments in Australia (9.7 per cent), Germany (8.1 per cent), the US (9.5 per cent) and Japan (6.7 per cent) spend a smaller proportion of the total expenditure on employees. France's federal government spends a massive 26.9 per cent on government employees, according to data from the Organisation for Economic Cooperation and Development (OECD). Data for all countries pertains to the calendar year 2019. Israel and Italy spend a bigger proportion of public funds on government employees than India.

Indian states usually spend more on employee compensation than the Centre. Many major states spend as much as 40 per cent of their overall annual spending on salaries and pensions of employees and ex-employees.