T.N. has second highest salary, pension expenditure

State looks to rationalise government workforce as a way to reducing revenue deficit

Tamil Nadu has the second highest expenditure on salaries and pensions among comparable peer States. Now, with over 14 lakh government employees, the State is looking to rationalise its workforce.

Last month, the State Finance Department passed a G.O. for the constitution of a staff rationalisation committee. The purpose of the panel is to evaluate the staff structure in various departments and identify non-essential posts, so as to reduce the revenue expenditure, and also identify jobs that can be outsourced or contracted. The move is being opposed by the Opposition parties, and the Tamil Nadu Government Employees Association staged a protest recently, urging the government to withdraw the proposal.

The government’s spending on salaries and pensions, as a percentage of its revenue expenditure, was estimated to be 40% between FY2016 and FY2018, according to data from ICRA, making it the second largest after Maharashtra. As per the Budget estimates for 2017-18, the State’s salary and pension expenditure is pegged at ₹66,908.59 crore, excluding the impact of the Seventh Pay Commission’s recommendations.

Five years in a row

What has complicated the situation further is that it has been facing a revenue deficit for five straight years (FY2014-2018), also one of the highest among peer States. Tamil Nadu has said it will exceed its projected revenue deficit of over ₹15,000 crore for FY2017-18, upon implementation of the Seventh Pay Commission’s recommendations.

A revenue deficit situation arises when the State collects less than the expected revenue and its revenue expenditure exceeds its receipts. The situation forces the State to borrow more to meet its expenses. The State spends roughly ₹72,000 crore or 25% of its expenses annually on social welfare measures — one of the highest in the country. The higher spending on salaries, pensions and freebies means the State has little leeway to spend on infrastructure projects.

Government sources told The Hindu that there was no other option but to look at rationalisation of the workforce. They also pointed out that Tamil Nadu cannot be compared with other States because of the huge size of government departments such as health and education.