Kerala: Salary, pension spending declines

THIRUVANANTHAPURAM: The state's biggest fiscal bane, its humongous expenditure on salaries and pensions, has been decreasing over the years. The latest report of Kerala Expenditure Review Committee has revealed that the committed revenue expenditure of the state - the combined share of salaries, interest, and pensions (SIP) - has shown a declining trend. It fell from 67 per cent in 2011-12 to 59 per cent in 2014-15. However, despite the decline of the share of SIP in revenue expenditure, the state still has the highest figures among all the states for pension payments as a proportion of revenue expenditure in 2014-15 at 15.7 per cent (all states reported 11.1%), and the fifth highest figure of 13.6 per cent (only after West Bengal, Punjab, Gujarat and Haryana) for interest payments as a proportion of revenue expenditure (the all-state average is 11.9 per cent.)

"As a result, the committed expenditure as a proportion of revenue expenditure was 5 per centage points higher for Kerala than the all-state average," the report said. In 2014-15, the corresponding figures for Kerala and all states were 34.5 and 29.8 per cent respectively. It was also the third highest for Kerala after Punjab (47 per cent) and West Bengal (38.4 per cent). Nonetheless, the report cautions that the declining trend could be a transitory thing. "It has to be noted that the sharp decline in the share of the sum of salary, interest payment and pension expenditure in revenue expenditure in the year 2014-15 could be on account of the higher growth rate of revenue expenditure," the report noted in a footnote. The growth rate of expenditure on Economic Services (which includes expenditure on agriculture, forestry, irrigation, industries, and rural development) increased dramatically to 28.60 per cent in 2014-15 from 1.55 per cent in 2013-14.

"This was primarily due to the increase in grants for Centrally Sponsored Schemes in Agriculture and Rural Development sectors being received and spent through state budgets instead of by implementation agencies directly," the report stated. During the next fiscal, in 2014-15, the growth in economic services fell to below 9 per cent. Result: the share of SIP in the revenue expenditure rose from 59 per cent in 2014-15 to over 60 per cent  in 2015-16.