Saturday, September 6, 2008
Sixth Pay commission report may be good news for the government employees but not so fine when it comes into play for a bigger cause. The recent survey by the Economic Advisory Council to the Prime minister revealed that the Sixth Central Pay Commission would have been an adverse affect in immediate future.
The last pay revision levied an additional expenditure of about 1.5 per cent of GDP at the State level. It is expected that this year, the reasonably healthy state finances would absorb the effect with much tenderly compared to a decade ago. Unlike in 1990, when the state own resources were stagnant, central transfers were declining and interest payments steadily increasing, the states is now running a revenue surplus of about 0.5 per cent. The states have now more central transfers, floating revenues and lower interest payments.
According to the report, the incredible improvement of states finances since 2003-2004 is due to high central transfer to the states, higher revenue collection from the sales tax and lower interest payments. It is expected that floating revenue is likely to continue for the medium term.
Labels: 6th pay comission
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