Salary hike for ULB staff to add to financial crunch: Officials

Days after the government’s announcement of a cumulative salary hike of ₹4,300 a month for 24,000 outsourced employees in urban local bodies (ULBs), the move came under criticism from officials of the finance department.

The state cabinet approved the salary hike on Thursday.

Dubbing the move as “unwise”, the officials said it would pose a huge burden on the resource-crunched state. According to them, the cumulative salary hike will cost the exchequer more than ₹50 crore.

“It will be a massive burden on the state government which is already reeling under a huge fund crunch owing to its mounting revenue (non-plan) expenditure,” an official in the finance department said on condition of anonymity.

The decision came a fortnight before the BJP government will issue notification for the much delayed civic polls.

The government earlier assured the Uttarakhand high court that it will issue notification for the civic polls by May 12.

All employees, who were given the salary hike, were outsourced through Uttarakhand Purva Sainik Kalyan Nigam Ltd (UPNAL), a corporation meant for the welfare of the ex-servicemen.

“As per the decision, all ULB employees outsourced through UPNAL besides those of the central government offices will get a uniform monthly raise of ₹1,500 besides some emoluments,” cabinet minister Madan Kaushik told reporters on Thursday.

Another finance department official said: “The decision was unwise as it would pose an additional burden of more than ₹50 crore on the state that is already facing a huge shortage of funds owing to a number of factors.”

The fund crunch followed, with the Centre tightening the purse strings some two years ago. The step was initiated in keeping with the 14th finance commission recommendations. The move came in the wake of the Narendra Modi-led BJP government’s decision to replace the Planning commission with Niti Ayog.

The Centre drastically slashing the fund flow came as a blow to the resource-crunched states like Uttarakhand, which were “completely dependent” on the funds doled out by the planning commission for development.

“The state government started facing the fund crunch after the Centre winded up the two main heads -- Special Plan Assistance (SPA) and Normal Central Assistance (NCA),” a senior planning department official said, adding the Centre though had increased the states’ share in the central taxes from 32% to 42%.

“But the benefit of this compensation was offset by the Centre’s decision to stop the central assistance under the SPA and NCA,” he said.

Officials also cited the “fiscal mismanagement and unrestrained revenue expenditures” as two other crucial factors coming in the way of development.

An official involved in budget making said a huge portion of the state budget goes into meeting the establishment costs.

“The revenue expenditure also goes up because of several departments and directorates that have been unnecessarily created in a small state like Uttarakhand,” he said.

As a result, “hardly any funds are left for the capital expenditure, which means funds spent in infrastructure building”, he said.

For instance, take the state’s annual budget of ₹45,500 crore for the current fiscal (2018-19). “Out of the total budget, only ₹9,500 crore have been set aside for infrastructure development whereas the rest will go in meeting the salary and establishment costs,” an official said.

As a result, finance minister Prakash Pant admitted, the government had to go for frequent borrowings. “But you have to pay the salaries of employees who work for the state,” he said denying that they were being paid salaries at the cost of development.