Centre, 3 states spent more on pension than salary, wages in FY20: CAG report

CAG report says that out of the Centre’s total Committed Expenditure of ₹9.78 lakh crore, ₹1.39 lakh crore was spent on ‘salary and wages,’ ₹1.83 lakh crore on pensions and ₹6.55 lakh crore on ‘interest payments and servicing of debts’

pension, CAG report, expenditure towards pension
Apart from the Centre, TMC-ruled West Bengal, and BJP-ruled Gujarat and Karnataka spent more on pensions than salaries and wages in 2019-20. Image: iStock

Latest data released by the Comptroller and Auditor General of India (CAG) has revealed that expenditure towards pension was a major component of the Committed Expenditure of the Centre and three states in 2019-20, and even surpassed the expenditure towards salary and wages.

Committed Expenditure mainly consists of interest payments, and expenditure on salaries, pensions and subsidies. The Centre had a Committed Expenditure of around ₹9.78 lakh crore in 2019-20, which was 37 per cent of its total revenue expenditure of ₹26.15 lakh crore.

Also read: Old Pension Scheme has become a poll promise; why are Punjab govt staff opposing it?

The report titled ‘Union and State Finances at A Glance’ said that of the Centre’s total Committed Expenditure of ₹9.78 lakh crore, ₹1.39 lakh crore was spent on ‘salary and wages,’ ₹1.83 lakh crore on pensions and ₹6.55 lakh crore on ‘interest payments and servicing of debts.’

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“The Committed Expenditure in respect of the Union Government consists of 67 per cent on Interest Payment and Servicing of Debt. The remaining 19 per cent and 14 per cent expenditure constituted the expenditure on Pensions and Salary and Wages respectively. It is apparent that expenditure on pensions is more than the expenditure on salaries and wages,” the report said.

It said that that the Centre’s pension bill accounted for 132 per cent of its expenses on salary and wages in the said fiscal.

Trend in Gujarat, Karnataka, Bengal

TMC-ruled West Bengal, and BJP-ruled Gujarat and Karnataka were the three states that spent more on pensions than salaries and wages in 2019-2020.

The expenses of Gujarat on pension was ₹17,663 crore, which is 159 per cent of the expenditure on salary and wages (₹11,126 crore), while the pension bill for Karnataka was ₹18,404 crore or 125 per cent of the expenditure on salary and wages (14,573 crore). The pension bill for West Bengal was ₹17,462 crore – 103 per cent of the bill on salary and wages (₹16,915 crore).

Also read: Cong, AAP make old pension scheme restoration demand major poll plank in Gujarat

The findings come at a time when states like Jharkhand have gone back to the Old Pension Scheme, while the two Congress-ruled states of Rajasthan and Chhattisgarh have also decided to revert to the older scheme.

The Congress and the AAP have promised voters to return to the old scheme if they come to power in Himachal Pradesh and Gujarat. The central government’s replacement of the Old Pension Scheme with the National Pension Scheme (NPS), which is more of a pension-cum-investment scheme, has miffed several government employees across states, who have demanded for a restoration of the old system.

Demand to return to Old Pension Scheme

Experts, however, say that a return to the older scheme will force states and the Centre to set aside a substantial part of the expenses towards pension from the Committed Expenditure, thus handicapping the government from spending on other fronts.

According to the report, the combined Committed Expenditure of all states was ₹12.38 lakh crore, which was close to half of their combined revenue expenditure of ₹27.41 lakh crore.

Also read: NITI Aayog VC expresses concern over revival of old pension scheme, says it will burden future taxpayers

A report by the Reserve Bank of India also said that the combined pension expenditure of states and Union Territories have doubled, from ₹1.63 lakh crore in 2013-2014 to ₹3.45 lakh crore in 2019-2020. It has further shot to ₹3.68 lakh crore in 2020-21 and is projected to reach ₹4.06 lakh crore in 2021-2022.

While Congress-ruled Rajasthan spent ₹20,761 crore on pensions in 2019-2020 – 42.7 per cent of its expenditure on salary and wages (₹48,577 crore), Chhattisgarh’s expenditure on pension was ₹6,638 crore or 30.62 per cent of the expenditure on salary and wages (₹21,672 crore).

The pension bill in Himachal Pradesh, was ₹5,490 crore or 47 per cent of the salary and wage expenditure (₹11,477 crore).

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