StatsGuru: States' pension burden overtook interest payments in 2022-23

CAG report shows pensions overtook interest costs in FY23 as states spent 43% of revenue on committed expenditure, including salaries, pensions, and debt servicing

Amid a debate on three variants of the pension system – old, new and unified – total payments of states under this head exceeded interest outgo for the first time in at least five years in 2022-23. As much as 43 per cent of revenue expenditure of states went to committed spend, which also includes salaries that year, according to a report by the Comptroller and Auditor General of India (CAG). 

The committed expenditure recorded a 9.37 per cent increase in 2022-23 year-on-year, reaching Rs 15.64 trillion. This has been more or less a trend, except for the Covid-hit year of 2020-21.   

Salaries constituted the largest component. However, the ranking of pension outgo and interest payments changed in 2022-23. 

 

Nine states were exceptions to this trend since interest payments exceeded pensionary expenditure. West Bengal and Rajasthan, which have the old pension system, as well as those which have the new pension system, made up this category. 

 

These nine states showed high debt burden due to which interest outgo was high too. 

 

After peaking during the pre-pandemic year, states had reduced their share of committed expenditure in total revenue spending from 45.29 per cent in 2019-20 to 43.49 per cent in 2022-23. 

  Nagaland had the highest committed spending in revenue expenditure. Notably, four of the top 5 states with the highest committed expenditure are hilly states.