Former Union Expenditure Secretary, Dr EAS Sarma warned Andhra Pradesh government of serious financial crisis in the state given the continued profligate spending by the state government and likely fallout of the seventh pay commission recommendations. The seventh pay commission last week recommended an average 23.55 per cent increase in the salary, allowances and pension of government employees and is effective from January 1, 2016. The union government generally accepts the proposal for pay revision, normally taken up once in 10 years, and the state governments usually responds with their own increases.
According to Dr Sarma, as soon as the Centre announces implementation of this award, the states will necessarily have to follow suit, unless they have the courage and conviction to resist the same. He expressed doubt that the State Finance Department had made any assessment of the impact of the Pay Commission’s award on the State’s finances and forewarned the political executive of its consequences.
Talking to this correspondent on state finances in the wake of 7th pay commission recommendations, Dr Sarma said he did not see any respite from the political leaders and the officials conducting the State’s affairs in a five-star environment nor had there been any respite from the State’s political leaders indulging in profligate expenditure at the cost of the people, including travel in private jets and splurging public money for unproductive, ceremonial purposes.
“Amaravathi, however prestigious it may be, has become a millstone round the neck of the government with its financial commitments going up every day in leaps and bounds. I have no doubt that funds intended to be spent on crucial development sectors such as public health, education, social welfare, agriculture, animal husbandry and so on, as well as, funds meant for the backward areas of north AP and Rayalaseema, will get diverted to fill the pockets of real estate developers and absentee landlords of Krishna and Guntur regions,” he said.
Talking about the 7th Pay Commission recommendations, he said the Centre’s decision to give 25% hike in the remuneration payable to the Central government employees, will have a snowballing effect for the States.
“Had an exercise been made on the likely spurt in the cash outflows on account of the Capital City project and the latest Pay Commission impact, the citizens of the State would have witnessed some relief from the five-star culture that seems to pervade the State administration today,” Dr Sarma said.
Stating that the State appears to have already exceeded the limits set out in the Fiscal Responsibility and Budget Management Act, he said, soon, the virus of the State’s liabilities would infect the Union’s finances as well, making it incumbent on the part of the Centre to insulate itself by invoking the Financial Emergency clause in Article 360.
” I am sure that the political executive has no wish to confront such an embarrassing situation. While economically, it will be a huge setback for the people of the State, it will also be a political setback for the party in power. It should do everything in the realm of possibility to avoid such a situation developing,” he added. It clearly was a Hobson’s choice as far as the State government was concerned, he said. ” State government should curtail its grandiose plans on Amaravati. It should stop the five-star culture in governance. It should ensure that public expenditure on health, education etc. is fully restored. It should also restore budgetary resources for north AP and Rayalaseema to maintain the regional balance,” he said.
Air-conditioned concrete structures in Amaravathi might not necessarily ensure good governance for the people of the State, he warned. “what is urgently called for is greater transparency of what the government does and greater public accountability,” Dr Sarma suggested.
