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Maharashtra’s adoption of pay panel suggestions to cost it Rs18,000 crore a year

LiveMint logoLiveMint 09-07-2017 Abhiram Ghadyalpatil

Mumbai: The Maharashtra government’s decision last week to implement the recommendations of the Seventh Pay Commission will cost the state around Rs18,000 crore every year, adding to the financial burden from the Rs34,000-crore-plus farm loan waiver announced just a fortnight ago. 

Maharashtra chief minister Devendra Fadnavis told a delegation of employees’ unions last week that the government was ready to implement the recommendations with effect from 1 January 2016. The move will raise salaries and pensions of more than 2.3 million state government employees. Fadnavis also indicated that the arrears will be paid in three to four instalments beginning April 2018.

Following this, the unions have withdrawn the strike planned on 12, 13 and 14 July, said G.D. Kulthe, general secretary of the Maharashtra State Gazetted Officers’ Association. “Implementation of the seventh pay commission’s recommendations effective from January 1, 2016 was our main demand and since the chief minister has accepted it, we have called off the strike we had proposed to launch,” Kulthe told Mint. 

In the last week of June, the Narendra Modi government at the centre announced revised wages for 4.7 million central government employees effective from 1 January 2016, as per the scales recommended by the pay panel. The burden on the central exchequer is estimated to be Rs30,748 crore. 

So far, Jammu and Kashmir, Gujarat, Uttar Pradesh, Haryana, Uttarakhand, Goa, and Punjab have said they will implement the recommendations.

Maharashtra has 1.9 million posts of government employees comprising gazetted officers, mid-level employees, police force and Class IV employees. Of these, around 200,000 positions are vacant and hence won’t be factored in when the revised pay scales are made applicable, according to Kulthe. The state government also has to implement the revised pension scales for 650,000 pensioners. “The overall burden will work out to Rs18,000 crore per year. The chief minister has indicated that the arrears will be paid in instalments beginning April 2018 and we are fine with it. The arrears as per the recommendations of the previous pay commissions were also paid out in instalments,” Kulthe said.

The arrears are likely to be paid in three to four instalments, he added. 

On 24 June, the state government announced a Rs34,022 crore farm loan waiver which was expanded later to cover more farmers. The state has requested the centre to direct the Reserve Bank of India to facilitate staggered repayment of outstanding farm loans at 6% or 7% rate of interest. State finance minister Sudhir Mungantiwar, who has also spoken in favour of the implementation of the 7th pay panel’s report after the loan waiver announcement, has said that Maharashtra was comfortable with an annual burden of Rs9,000-9,500 crore on account of the loan waiver. 

An official at the general administration department said the wage hike and pension arrears would also be spread over four to five instalments. “The finance department is looking at options to raise funds for the loan waiver and revised wages. The 2017-18 budget has not factored in this additional burden on account of higher salaries, though the finance minister in his budget speech favoured implementation of the pay panel’s implementation,” the official said requesting anonymity.

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