THIRUVANANTHAPURAM: The implementation of the 10th Kerala Pay Revision Commission, which will submit its report by the end of this month, will inflict what economists term a “heavy fiscal shock” on the economy.
The UDF Government, however, is expected to postpone the shock to the next fiscal. The state government, already crippled by a lack of resources, will have to mobilize 30-35 percent additional resources to soften the impact of salary revision for two consecutive years.
For a state that does not have revenues to fund even 50 percent of its plan outlay on a normal year, raising additional resources to the tune of Rs 3,000 crore for salary, pensions and arrears would be virtually impossible.
Though the Oommen Chandy government will announce the pay revision this fiscal, the impact will be felt only from the next fiscal, after another government is sworn in.
Finance minister K M Mani’s latest budget itself provides the hint. Mani has shrewdly made only a vague mention of pay revision in Budget 2015-16.
“I have left sufficient fiscal space in this Budget for accommodating the increases in salaries and allowances that will be necessary on account of the recommendations of the Pay Commission,” he said.
The fine print of the budget, however, does not lend credence to the claim. In 2015-16, Mani has set apart Rs 26,667.09 crore for salaries.
This is just a 20 percent increase from the 2014-15 expenditure for salaries (Rs 26,594 crore). This is normal increase.
The 2014-15 expenditure, for instance, recorded a 14 percent increase of the previous year. The 2013-14 increase was 11 percent.
A pay revision year will necessitate a higher than normal increase in salary expenditure.
The last pay revision was implemented during 2011-12 and the salary expenditure (Rs 16,029 crore) for that fiscal recorded a 45 percent increase of the previous fiscal (Rs 11,032 crore).
