Pay hike not to disrupt state finances: Montek

Written by Agencies | New Delhi, February 27: | Updated: Feb 27 2008, 16:32pm hrs
The Planning Commission does not foresee any significant disruption of state finances on account of increase in salaries of state government employees.

"I don't think that this disruption is going to be all that crucial," Commission Deputy Chairman Montek Singh Ahluwalia said on the possible impact of adoption of the Sixth Pay Commission award by the state governments.

The Pay Commission, constituted by the central government, is expected to submit its report by early April and the state governments would be under pressure to revise the salary of state employees, once that happens.

Pointing out that blind adoption of the pay commission award by the state governments is not a good idea, Ahluwalia said pay commissions are constituted once in 10 years and the states can do many things to neutralise the impact.

The government, he said, was made to effect a big increase in salaries of its employees at the end of 10 years as the dearness allowance (DA) does not adequately take care of inflation.

"So at the end of 10 years, the government will be benefiting from a squeeze in real pay because the DA was never you have a big increase," he added.

The Railway Budget has made an ad hoc provision of Rs 5,000 crore for 2008-09 to meet additional liability towards employees and pensioners in anticipation of the Pay Commission recommendations.