Bengaluru: Chief Minister Siddaramaiah could find himself walking into a financial quagmire as his government is expected to decide on the 7th Pay Commission and the Old Pension Scheme (OPS), which seem difficult amid hefty expenditure on the five ‘guarantee’ schemes.
Hiking salaries as per the 7th Pay Commission scales and switching back to the OPS - two demands that government employees are glued to - are likely to become a factor during the June 3 elections to the teachers' and graduates' constituencies. The electorate in these polls includes government employees who are anticipating a decision from the government.
Implementing these two demands will make life difficult for Siddaramaiah, the finance minister who has already earmarked a whopping Rs 52,009 crore on the five guarantee schemes this fiscal.
The 7th Pay Commission, headed by former chief secretary K Sudhakar Rao, has recommended a 27.5 per cent hike on basic salary of government employees. This is expected to cost the government an additional Rs 17,440.15 crore annually.
In 2024-25, the government will spend Rs 80,434 crore on salaries, Rs 32,355 crore on pensions, Rs 39,234 crore on interest payments and Rs 25,904 crore on subsidies.
The Finance Department has also flagged OPS replacing the New Pension Scheme (NPS), a market-linked retirement plan that was introduced in Karnataka for those who joined service on or after April 1, 2006. A section of government employees wants the government to revert to the OPS.
"Most states, including Karnataka, have switched to NPS from the erstwhile OPS after realising that the latter might be unsustainable in the long run...switching back to OPS would be fiscally disastrous for the state's finances in the long-term and would lead to cutting back on welfare and developmental expenditure," the Medium Term Fiscal Plan 2024-2028 states.
Mindful that indecision could create a negative sentiment among voters, especially government employees, Siddaramaiah volunteered to address the two topics at a Congress meeting on Sunday.
"The NPS was enforced when the JD(S)-BJP coalition was in power. You need to tell voters who don't know this. It's they who're responsible for NPS, not Congress," Siddaramaiah said, adding that his government is "examining" the demand to do away with NPS.
Salary hike
On hiking salaries as per the 7th Pay Commission scales, Siddaramaiah said he is "positive" about it. But he lamented that implementing 6th Pay Commission during his first term as CM did not help him electorally. "I took on a burden of Rs 10,600 crore. But you didn't support us," he said.