Dec 022015

Odisha to take Rs 5,000-crore hit from 7th pay commission

A few weeks ago, Seventh Pay Commission made a few recommendations. In regards to that, Odisha government might take an extra amount of Rs. 5000 crore in a year for paying higher pension and salary to the staff. In the report submitted, the pay panel suggested 15% raise in salary (excluding allowances) and 24% increase in pension from January 2016.

If the state accepts the panel report, Odisha will have to spend Rs 3000 crore more in a year for paying higher salary to 500000 employees and Rs. 2000 crore for paying pensions. In 2015-2016 budget, Odisha has given an estimation of Rs 18,201 crore annual salary and Rs 8593.2 crore for pension.

R Balakrishnan, finance secretary of Odisha said that the cabinet has to examine the report submitted by the pay panel. They will examine the report and then decide whether it requires changes or if the recommendations are to be implemented. If they implement the recommendations put forth by 7th Pay Commission, they will figure out an estimation of additional amount to be given for salaries and pensions. Besides, he also mentioned that the state is well armed with resources to provide additional expenditure for the state, as and when the need arises.

Numerous factors are responsible for offering the supplementary expenses. In spite of muted tax collection from the commodity sector, revenue collection was raised 25% in first 6 month of financial year 2016. This increase was because of price changes in minerals and petroleum products. In financial year 2015, revenue collection grew at 10% because of termination of several mines. However, the state has supported re-opening of several shut mines and collected about Rs. 1200 crores towards stamp duty.

Also, the fiscal health of the state is quite excellent. The debt to gross state domestic product ratio is 16% against the financial responsibility and 29.5% budget management norm. Experts say that such a fiscal health will be enough to meet the capital formation expenditure while keeping some funds aside for extra non-planned expenditure to pay higher pensions and salaries.

Moreover, the state is expected to collect substantial revenue from the coal auction as well as from the upcoming actions of iron ore, chromite, bauxite, limestone and various other minerals auctions.

Panchanan Kanungo, the former finance minister believes that it will not be difficult for state to offer an additional burden for implementing the 7th Pay Commission

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