LATEST ON 6TH PAY COMMISSION-UP GOV.

Pay hike burden to make a dent in development plans
29 Nov 2008,
LUCKNOW: The welfare of 16 lakh government employees
and teachers has virtually negated the development interest of the 17 crore population of
Uttar Pradesh. This is because the hefty financial burden, caused by their pay-hike under the Sixth Pay Commission report, has forced the government to slash the state's annual plan size fixed at Rs 35,000 crore for the current financial year.

If sources within the finance department are to be believed, then a plan outlay of Rs 1,115 crore for the year of 2008-09 would be curtailed. This is a part of various measures planned to meet the financial obligations on account
of pay-hikes.

This is beside the order already issued to freeze Rs 900 crore deposited with the Public Ledger Account (PLA) before March 31, 2007. The PLA amount is a fund that could not be utilised on earmarked schemes by departments concerned within a financial year ending on March 31 every year. Reasons could be varied for this. But in any case, the fund is carried over for the next year and utilised as per needs. However, after its freeze, it would be no longer available for development purpose. This means many schemes would either be put off or delayed for their execution.

The pay-hike decision has virtually sent the state exchequer bleeding under a hefty financial burden of Rs 18,336 crore. Since it comes as a popular measure to keep state employees happy ahead of the Lok Sabha poll, the government has chosen to rely on soft options for its fund management. While so far no new taxes have been imposed, the government has gone in for dovetailing of available resources.

This way, the government has already raised Rs 2,015 crore from the cut in the plan size. But still there is a yawning gap, as it needs an additional equal amount to meet its financial obligation. But then the financial officials put it that the liability would be spread mainly for the next financial year, as this financial year has only four more months to go.

What makes the situation difficult is the shortfall in the revenue collection, which is earmarked at Rs 33,813 crore during the current financial year. By the end of October, the total tax recovery stood at Rs 15,000 crore as against that of a target set for Rs 16,000 crore revenue. The collection though the major source of the VAT regime dipped to Rs 8,883 crore as against the target of Rs 9,712 crore and the land revenue tax touched a shortfall of 10% till October.

The recovery through stamp and registration fee, however, has shown an increase of 2.5 per cent by collecting Rs 3,005 crore as against the target of Rs 2,506 crore for the above period. This also holds true about the excise department, which has collected 2,567 crore as against the target of Rs 2,480 crore.

The depletion of its own resources would increase the state's dependence on its share in the Central taxes that stands at well over Rs 33,000 crore and the Central grants-in aid of about Rs 12,000 crore. This may lead to a fiscal deficit and in case it increases more than 3% of the state's GDP, then there will be a severe financial crisis
.