Pension bill exceeded salary & wages spending for Centre, 3 states: CAG data

Source: The post is based on the article “Pension bill exceeded salary & wages spending for Centre, 3 states: CAG data” published in Indian Express on 6th December 2022.

What is the News?

According to the Comptroller and Auditor General of India(CAG) report titled ‘Union and State Finances at A Glance’ for 2019-20, expenditure on pension has emerged as one of the major components of the Committed Expenditure of the Centre and States in recent years.

What is committed expenditure?

The committed expenditure of the State Government on revenue accounts consists of interest payments; expenditure on salaries and wages; and pensions.

If the Committed Expenditure is higher, it means that the government has lesser flexibility to determine the purpose for which revenue expenditure is to be incurred.

What is the committed expenditure of the centre and states?

Centre’s Committed expenditure: The Centre’s total Committed Expenditure was Rs 9.78 lakh crore during 2019-20. This accounts for 37% of its total revenue expenditure. It included an expenditure of Rs 1.39 lakh crore on ‘salary and wages’, Rs 1.83 lakh crore on pensions and Rs 6.55 lakh crore on ‘interest payments and servicing of debts’.

– The Centre’s pension bill was 132% of its expenditure on salary and wages in 2019-20.

State’s committed expenditure: During 2019-20, the total Committed Expenditure of all states stood at Rs 12.38 lakh crore which was almost half (45%) of their combined revenue expenditure of Rs 27.41 lakh crore.

– The pension bill exceeded the salary and wages expenditure across three states – Gujarat, Karnataka and West Bengal – in 2019-20.

– Across five states – Uttar Pradesh, Bihar, Maharashtra, Tamil Nadu and Odisha – the pension bill accounted for over two-thirds of their expenditure on salary and wages.