Wednesday, November 5, 2008

Himachal Pradesh Pay Hike Update

In the shadow of global economic uncertainties unfolding elsewhere, the state government with bated breath here awaits Punjab implementing the 6th Pay Commission recommendations as it will set back the debt trapped hill state by a whopping Rs 1500 crore.

“In a draft paper circulated at a recent meeting, Punjab declared intentions of devolving a pay package for its employees that was higher than the central pay commission recommendations,” said a senior government official on conditions of anonymity.

“Since our pay structure is tied to Punjab pay scales, this could scale up the salary bill by additional Rs 1500 to Rs 2000 crores, depending upon what the neighboring state announces” he said.

“The governments present salary bill at Rs 3000 crore is about 30 percent of the gross budget expenditure and after implementing the new pay structure it is likely to increase to about one-third of the total expenditures,” says DK Sharma, an economist who tracks government budgeting.

There are about 3 lakh government employees and the additional pay impact would be in the range of Rs 1200 to 1500 crores, said Sharma.

“Under the aegis of World Bank, a study to optimize and rationalize the number of employees in education, health and public works departments is being undertaken,” said the government official. It recommendations could help in reducing number of employees needed to effectively deliver public services, he added.

On the other hand chief minister Prem Kumar Dhumal at a recent public meeting in Kinnaur announced that the government would fill up as many as 28,000 posts in the current fiscal of which 18,000 would be in the education department.

Meanwhile to fend onslaught of a sudden financial stress condition the finance department is attempting to stagger the impact.

Arvind Mehta, finance secretary said, “releasing a 6 percent interim relief for the employees recently was just to reduce a sudden impact of paying arrears on an additional salary bill.”

Mounting salary and pension bills alongside meeting interest payments on an accumulated debt about Rs 23,000 crores keeps the state in perpetual financial distress.

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