HYDERABAD: Can Telangana, which is spending less than five per cent of its budget on health, afford to give its employees a lucrative pay hike?
The first Pay Revision Commission (PRC) recommended 7.5 per cent fitment to its employees. The State government already has huge financial commitments towards interest payments, which are going to increase abnormally in the coming years.
This includes its expenses on subsidies and welfare schemes. These, coupled with a fatter salary bill, would gobble up more than 90 per cent of funds allocated under the revenue expenditure.
As a result, the State government at the most may give a 10 per cent pay rise to its employees. The revenue expenditure as per the budget estimates of 2020-21 is Rs 1,38,669.8 crore.
Out of this, the State government has spent only Rs 87,757.07 crore upto December, 2020. As per the Budget estimates, the expenditure on salaries/wages is Rs 24,896.32 and on pensions is Rs 10,065.62 crore in 2020-21.
If the government implements the PRC recommendations, the total financial burden on the exchequer per year is Rs 2,252 crore, which includes Rs 1,577 crore for pay and allowances and Rs 675 crore for pensions.
What the PRC report says
“The outstanding debt as a percentage of Gross State Domestic Product in Telangana has slowly grown from 16.03 per cent in the year 2014-15 and likely to reach 21.39 per cent in 2019-20. The repayment schedule is likely to start from 2020-2021 on projects like Mission Kakatiya and Mission Bhagiratha, and its associated works. The outstanding debt is likely to increase in the coming years putting a strain on revenues. Therefore, the government will have to review the overall situation and provide a budget to various sectors including that required for salaries and pensions. This is a substantial portion of the revenue expenditure at the State-level. The situation is likely to put a serious constraint on the growth of the expenditure in the coming five years,” the PRC report stated.