7th pay panel report implementation to hurt fiscal health

Neena Sharma

Tribune News Service

Dehradun, December 8

The burgeoning non-plan expenditure of the state is expected to increase with the impending implementation of the recommendations of the Seventh Pay Commission early next year. The Harish Rawat-led Congress government cannot risk earning the wrath of government employees considering approaching Assembly elections in case it soft peddles the issue.

The committee headed by former bureaucrat Indu Kumar Pande is already half way through with the report and is likely to submit it by the end of next week. The financial health of the state is a cause for concern and the BJP and the Comptroller Auditor General (CAG) have repeatedly told the government to take suitable measures to rein in escalating non-plan expenditure.

The government has no funds to take up new projects. It faced problems trying to arrange funds for disbursing salaries to its employees in November and December. Further, once the pay commission recommendations are implemented, the state’s problems are expected to increase.

According to the Finance Department, Uttarakhand will need a budget of Rs 12,000 crore for making payments (salaries, allowances) to its government employees and pensioners, once the go-ahead is given to the implementation of the Seventh Pay Commission report.

According to a CAG report, successive Uttarakhand governments have been freely borrowing from the market. The market borrowing has steadily increased since 2010-2011 when it was 14 per cent and in 2014-2015 it was 19.13 per cent. The government utilised on an average 25 per cent of the fresh borrowings for 2010-2011 to 2014-2015 for making repayments of matured market loans whereas on an average 74.96 per cent was applied for capital repayment.

The payment of matured market loans from fresh loans was against the provisions of the Fiscal Responsibility and Budget Management Act (FRBMA) 2003, which the Uttarakhand government has been violating. Even this year, fresh loans were raised from the market to pay accrued interest on previous loans.

The state spends a major chunk of the non-plan expenditure on salaries and pensions of employees. The expenditure on pension payment was Rs 2,452 crore in 2014-2015 and this is expected to rise with the implementation of the pay commissions recommendations.