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Salary bill to eat away half of state's revenue

Monday, February 12, 2018
By Raju Vernekar

Even as the Maharashtra Government has agreed to implement the Seventh Pay Commission report from first January 2016 onwards, the total expenditure of over 19 lakh employees, including salary, pension and dearness allowance, will slice thee revenue by nearly 50 per cent, putting powers that be in a fix.

While the state’ revenue is pegged at Rs 2,43,738 crore for 2017-2018, the employee expenditure is expected to be in the region of Rs 1.37,214 crore. It includes salary expenditure Rs. 87,147 crore, pension Rs 25,567 crore, the proposed implementation of 7th Pay Commission report Rs 21,000 crore and arrears of dearness allowance Rs.3,500 crore.

The state is already reeling under the burden of Rs  34,000 crore due to farm loan waiver. Besides,  existing public debt has mounted up to Rs 4,33,214 crore and along with interest of Rs 31,027 crore, the total debt burden has reached up to Rs 4,64,241 crore, worrying the government, which has to balance its applecart. A committee headed by retired IAS officer K P Bakshi is already in the process of collating  data on number of employees and their pay scale.

Burdened with the increased salary bill, the government is considering cutting its total workforce by 30 per cent. In December last, the finance department had issued a Government Resolution (GR), asking all the departments to make a new master plan for staffing needs and submit the total number of staff they require. It said that the different departments must cut the demand for human resources by 30 per cent by adopting new information technology and bringing efficiency. All the departments, except home and public health, were asked to cut staff and implement the new staffing master plan.

As of now there are nearly 15 per cent vacant posts and the government has already stopped recruiting in the wake of its poor financial condition. There are 13 lakh state government employees and around 6 lakh pensioners.

Now that GST has replaced all other taxes, the state has stepped up drive to cover maximum revenue by way of taxes. The state collected Rs 18,701 crore during July to November, 2017 and also collected a cess of Rs 846 crore, which is being used to compensate for the shortfall that occurred after shifting to the new taxation regime and garnered Rs 3,702 crore through cess levied on luxury goods since the rollout.

Meanwhile, the government expects to sign agreements worth over Rs 72,000 crore in the ensuing “Magnetic Maharashtra Investor Summit” to be inaugurated by Prime Minister Narendra Modi in Mumbai on February 18. Chief Minister Devendra Fadnavis' cabinet has already unveiled a seven-pronged strategy to attract investors in sectors ranging from defence and aerospace to electric vehicles and coir.  The initiatives are expected to generate employment for one lakh people, and the government will raise a corpus of Rs 1,000 crore to ensure uninterrupted flow of capital to medium, small and micro industries in these sectors.

The policies with specific sops targeting sectors like aerospace and defence, electric vehicles, fintech, coir, textiles, garments, jewellery and integrated logistics parks, have been devised to create the right environment for these industries to flourish. For example Rs 200 crore have been allocated to be spent over five years for spurring aerospace and defence-related investments.  The estimated investment is textile Rs 3600 crore, space and defence Rs 12,000 crore and electric vehicles Rs 24,000 crore.

The state government will establish defence hubs in Pune, Nagpur, Ahmednagar, Nashik and Aurangabad. Test ranges and storage facilities will be made available, considering the unique needs of industries in these sectors.

The government is also planning to set up 'Global Fintech Hub' in the Mumbai Metropolitan Region (MMR), Mumbai which will be among the top five financial technology centres internationally. 'Fintech' is essential to the banking, financial services and insurance sectors.

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