THIRUVANANTHAPURAM: Pay revision is one of the big questions that Friday’s state budget is expected to address. For the 5.23 lakh government employees and 4.5 lakh pensioners, the wait has been long. The last revision was in 2019 while the next, in keeping with the customary five-year cycle, was due by 2024. The LDF government, at the fag end of its tenure, appointed the 12th Pay Commission in February. The three-member panel’s tenure ended on May 23 without submitting a report.
There is a common perception that all government employees are high earners. However, an analysis of the pay stage, the current position of an employee on the pay scale for his post, tells a different story. The take-home salary of a government employee comprises pay stage plus DA plus HRA. For over 50,000 employees, falling in the Rs 2,240-33,800 pay stage bracket, monthly take-home is Rs 50,000 or less, including dearness allowance (DA), currently at 35%, and 10% house rent allowance (HRA). For instance, a government employee at a pay stage of Rs 30,000 takes home Rs 43,500.
The single-largest group, 2.22 lakh employees, or 42.% of total, falls in the Rs 50,001-75,000 pay-stage bracket. Nearly 94% of all employees are in the below Rs 1 lakh bracket. As many as 32,791 employees fall in the Rs 1-2 lakh pay stage bracket and 846 between Rs 2-2.85 lakh.
The new government faces a dilemma. Salary and pension expenses were a combined Rs 75,319 crore in 2025-26. Of this Rs 45,859 crore went towards salaries and Rs 29,460 crore for pensions.
The government’s spending on salary and pension increased by Rs 25,000 crore in 2021-22 due to the 11th Pay Revision, as per the CAG’s State Finances Audit Report. While the expenditure on salary increased by Rs 17,000 crore, additional commitment on pension and retirement benefits was Rs 8,000 crore than previous year. The 12th revision is expected to see a similar surge in outgo. Another liability is the DA arrears of Rs 21,670 crore it inherited.
The recent white paper tabled in the assembly said 77 paisa of every rupee earned by the government is spent on committed salary, pension and interest payments. On Friday, it is expected to come up with a proposal that would satisfy both employee and the treasury.
EXPERT’S TAKE (Dr C Veeramani, director, Centre for Development Studies)
Pay revision should be viewed not merely as an employee welfare measure but also as a fiscal policy issue. Large revisions implemented at short intervals can substantially increase committed expenditure and reduce the government’s flexibility to invest in development and infrastructure. Unlike the Centre, which revises pay once in 10 years, Kerala follows a five-year cycle. Kerala may need to consider whether a 10-year revision cycle, coupled with annual inflation-indexed adjustments, can strike a better balance between employee welfare and fiscal sustainability.