7th Pay Commission: Big trouble! Salary hike for employees makes this government ring alarm

7th Pay Commission salary hikes for government servants have brought a big windfall for them and their families, but for the government, keeping up with the payments is proving to be an exercise that they are finding very tough to wrestle with. How so? Well, various states finance ministers have been struggling to ensure they manage to fund the 7th CPC based financial outgo without actually affecting the economy in any way at all. The latest to send this signal of worry is Tamil Nadu. It has been revealed that the 7th pay commission based payouts have affected the state's finances so much so that it has led to a revenue deficit in 2017-18 that is higher than the one that was projected. This was revealed by Finance Secretary K Shanmugam. How big is the Tamil Nadu revenue deficit? Well, while the previous Budget had projected a revenue deficit of Rs 15,930 crore, the revised estimate number is Rs 18,370 crore, BusinessLine reported. However, he also held out hope and said that this will reduce in the future as revenue is expected to rise. He said, "Revenues are expected to grow at 14% while expenditure on salary growth is expected at 8-9 per cent." He was speaking to the media after the Budget was presented in the assembly.

Taking the 7th pay commission revision into account, salaries and allowances are estimated to be Rs 52,171.18 crore and pension and other retirement benefits are estimated to be Rs 25,362.20 crore in the budget estimates, O Panneerselvam said. Tamil Nadu budget was presented by finance minister and Deputy Chief minister O Panneerselvam. Significantly, government has managed to lower state's fiscal deficit from 4.12 per cent of GSDP to 2.82 per cent. Tamil Nadu government had presented a revenue deficit budget of Rs 17,490.58 crore. 

While this is happening at the state level, at central level, government employees are increasingly anxious about what is going to happen to their 7th pay commission based salaries. Will they rise by a fitment factor of 3.68 times with minimum pay rising to Rs 26,000 or not? The government is wrestling with the question of how exactly to fund the outgo.