EXPLAINED: As Centre Hikes DA, Here’s How The Total Salary Bill Has Changed

The hike of 11 per cent granted in the dearness allowance and dearness relief for central government employees will cost the exchequer about Rs 34,400 crore annually. The revision in the DA and DR, done every six months, was put on hold in view of the Covid-19 pandemic, but following the Centre’s decision to restore it after a gap of one-and-a-half years it now stands at 28 per cent of the basic pay/pension for government employees and pensioners. Here’s all you need to know about the Centre’s salaries and pensions bill.

What Is The Latest Data On Total Spend On Salaries, Pensions?

According to the 2018-19 Annual Report on Pay and Allowances of Central Government Civilian Employees, the latest available, compiled by the Department of Expenditure (DoE) under the Ministry of Finance, the total spend on salaries and pensions of central government employees in that year was Rs 2.08 lakh crore. It represented a jump of over 7 per cent from the salary and allowances bill for the previous fiscal, which stood at Rs 1.94 lakh crore.

But as a proportion of the total budgetary spend, the figure for 2018-19 amounted to a slight drop over 2017-18. The total amount for salaries and allowances paid was at 10.5% of revenue receipts for 2018-19 compared with 10.9 per cent in 2017-18. As part of the revenue expenditure, the spend in 2018-19 was 8.7 per cent as against 8.8 per cent in the previous financial year.

The Centre’s salary bill in the 10 years till the 2018-19 fiscal

What Is The Total Number Of Central Govt Employees?

According to the 2018-19 DoE report, the total number of central government civilian employees till March 1, 2019, was 31.43 lakh whereas their sanctioned strength was 40.66 lakh. Which meant that more than a fifth of all sanctioned posts were empty. There’s also the salaries and pensions of defence personnel and members of the armed forces that are borne by the Centre. Their number was at 14 lakh according to data from the Seventh Pay Commission, whose report was submitted in June 2016. It had also noted then that there were a total of 52 lakh pensioners.

The DoE report said that almost 80 per cent of the entire annual salary and allowances bill was accounted for by just five ministries/departments: Railways, Defence (civil), Home Affairs, Posts and Revenue. These five ministries/departments also make up more than 90 per cent of the total central government staff strength.

In a reply to a question in the Lok Sabha last year, the Ministry of Personnel, Public Grievances and Pensions had said that against a sanctioned strength of 38 lakh, there were a total of 31.1 lakh regular central government civilian employes, a shortfall of more than 6.83 lakh.

What Are The Different Components Of The Salary?

The DoE report said that DA made up about 6.41 per cent of the total salary expenditure with the other heads being Pay (70.9 per cent) and house rent allowance (6.75 per cent). Other allowances accounted for a further 15.9 per cent of the salary bill.

The report also noted that the Railway Ministry, at 36.8 per cent, made up the biggest chunk of salaries paid by the Centre followed by the Home Ministry (24.3 per cent). Both ministries had seen a slight dip in salary spend over the previous fiscal, the report said, adding that the department of posts (5.9 per cent) and the civil staff of Defence Ministry (13.6 per cent) had registered a slight increase in their proportion of the Centre’s total salary bill.

How Are Salaries Of Central Govt Staff Revised?

The Centre periodically appoints a Pay Commission to go into the salaries and emoluments of government staff, which is also followed by the state governments. The panel is constituted every 10 years to review and propose changes to the pay and pension of government employees. The Seventh, and the latest, Pay Commission had submitted its report in 2016 and it had recommended that, among other things, the minimum pay for service with the central government should be Rs 18,000 per month while the maximum pay could go till Rs 2,25,000 per month for apex scale and Rs 2,50,000 per month for the Cabinet Secretary and other at the same pay level.

A report by PRS Legislative Research on the Seventh Pay Commission notes that the central government’s share in organised sector employment “has gradually decreased” and, in 2012, the central government employed 8.5 per cent of the organised workforce as against 12.4 per cent in 1994.

This is how the Centre’s salary bill has changed year-on-year

Which States Have The Biggest Salary Bills?

While salaries make up a sizeable chunk of the total budgets of the various states, its proportion varies. According to analysis by Centre for Budget and Governance Accountability (CBGA), salaries make up about 12 per cent of the state government’s budget in Bihar and Uttar Pradesh to about 26 per cent in Kerala and 25 per cent in Rajasthan. In states like Uttarakhand and Assam, it can go up to 30 per cent.

According to the Reserve Bank of India (RBI)’s 2020-21 State Finances report, in absolute terms, Maharashtra had the largest salary bill at over Rs 1 lakh crore followed by UP at 60,000 crore. The total salary spend by the state governments and the Union Territories, per revised estimates for 2019-20, was Rs 7.96 lakh crore.

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