Thursday, February 5, 2009

News to cheer :Maharastra Govt. approves pay hike

In the run-up to the elections, the Democratic Front (DF) government on Wednesday brushed aside fiscal prudence and decided to implement the Sixth Pay Commission for 14 lakh serving employees and 7.42 lakh pensioners, with effect from January 2006. The average 25% salary hike will dent the state exchequer with an additional payout of Rs 8,091 crore a year from 2009-10. 

Moreover, employees would get outstanding dues from January 2006 to March 2009 over the next five years. The payment, with retrospective effect, would further burden state finances by a whopping Rs 18,370 crore. 

At a time when the state's tax revenues are down due to the economic slowdown, the payout is expected to substantially aggravate the already high debt scenario. As of 2007-08, the state had a debt burden of 1,44,325 crore, which accounted for 24.9% of the state gross domestic product (SGDP). 

Once the salary hike comes into force, a Class-II junior engineer in a state corporation would get Rs 17,000 as basic emoluments compared to the current Rs 13,500. Similarly, a Class-III employee's salary would rise to Rs 11,700 from Rs 9,600. 

On Wednesday, chief minister Ashok Chavan announced that the Cabinet had cleared the finance department's proposal to implement the Sixth Pay Commission. "It had to be given as the state follows the Centre in terms of implementing pay commission recommendations. It has nothing to do with the elections due this year,'' he told TOI. 

Interestingly, Chavan said the increase in salary covers a jump in basic, dearness allowance and grade pay. "We are yet to decide on revision of House Rent Allowance (HRA) and conveyance allowance,'' said Chavan. Sources in the finance department are quick to point out that delineating HRA and conveyance from the salary hike has controlled the burden on finance to a certain extent. 

Asked about the growing fiscal deficit due to the Sixth Pay Commission, Chavan said it is inevitable. "I agree that the economic slowdown has dented our revenues and salary hikes will put more burden. But the measures have been taken after considering the comfort factor of the finance department.''

There will be an overall increase of 20 to 25 per cent in the salary of the employees and the arrears from January 2006 to March 2009 will be deposited in provident fund for the employees in the next five years, while the retired employees will also get the same amount in five years.

With regards to the pension amount, Chavan noted that those employees who had retired before January 1, 2006 would get an additional benefit of upto 40 percent of the pension amount. Also, the state government has reduced the eligibility age of 33 years of services for entitlement of pension to 20 years

Source : Times of India and our own .



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