It pays to be a state govt employee or retiree: Study

NEW DELHI: Salaries and retirement benefits of all state government employees, which were as high as one-third of the aggregate revenue expenditure or two-third of states��� own tax revenue in the eight years up to 2008, is set to rise sharply, said a study commissioned by the thirteenth finance commission chaired by Dr Vijay Kelkar.

The study done by Rajasthan government���s principal secretary Subhash Garg and Invest India Economic Foundation MD Gautam Bhardwaj made a case for the Union government and states to urgently set up an electronic database of employees, pensioners and the benefits to be given to them.

The study urged the Thirteenth Finance Commission to tell the Centre and state governments to initiate this immediately so that a reliable reference is available for fiscal planning. The Thirteenth Finance Commission was set up to advise on how to share Centre���s net tax revenue with states in the five years from April 2010.

The study on building an employee, pensioner database said the direct and indirect employees of states governments form less than 6% of the paid workforce and roughly 2% of India���s population. However, aggregate payments towards salaries, lump sum terminal benefits such as gratuity and leave encashment and monthly pensions on an average amounted to 32.77% of states��� total revenue expenditure and 67.3% of states��� own tax revenue between 1990-91 and 2008-09.

These costs grew at a CAGR of 17.13% across states. The study projected a 30% increase in this expense due to wage hike but the exact rise may depend on the demographic profile, the study said.