SHIMLA: In a move likely to spark discontent among the retired workforce, the Himachal Pradesh government has announced that while salaries for state employees will be credited on October 1, pensioners will have to wait until October 9 to receive their payments.
This decision comes after the Finance Department reviewed the state’s current cash flow and took steps to mitigate financial pressure on the treasury.
The delay in pension payments comes on the heels of similar measures in September, when government employees received their salaries on September 5 and pensioners on September 10. This staggered disbursement is part of the government’s effort to manage limited financial resources more judiciously, as the state grapples with a widening gap between revenue and expenditure.
Balancing act between loans, interest payments
One of the key drivers behind the delay is the state’s growing debt burden. Himachal Pradesh is committed to repaying an annual debt of Rs 10,000 crore, a significant chunk of which goes toward interest. The state government is trying to minimise borrowing to cover salaries and pensions as loans taken at inopportune moments could result in higher interest rate. The Finance Department has highlighted that delaying payments by just a few days could save the government Rs 3 crore in monthly interest, amounting to Rs 36 crore annually.
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The government’s overall expenditure on salaries and pensions has become a heavy financial burden, with Rs 25,000 crore being allocated each year. Monthly payments to employees and pensioners range between Rs 2,000 crore and Rs 2,200 crore, leaving limited room for other developmental initiatives.
Financial challenges, revenue targets
With only around 40% of the state’s budget left for developmental projects after accounting for salaries, pensions and debt repayments, the financial strain is palpable. The government is aiming to generate Rs 18,739.39 crore in revenue this year, of which Rs 15,100.69 crore is expected to come from state taxes and Rs 3,638.70 crore from non-tax revenue.
The state is also banking on Rs 18,141.47 crore from central government tax transfers. The decision to stagger payments is indicative of the precarious fiscal situation in the state, where the timing of revenue inflows plays a critical role in avoiding additional debt, said an official.
Employee concerns, government strategy
While the government’s financial management strategy is aimed at cutting unnecessary costs, it has not gone unnoticed by employees and pensioners. Many retirees, who rely on their monthly pensions for essential expenses, have voiced concerns about the delays. Government employees, though receiving their salaries on time this month, have also been vocal about the potential for future payment disruptions.
The Finance Department, however, has reiterated that these measures are temporary and necessary to stabilise the state’s financial situation. The government hopes to continue adjusting its cash flow strategy in a way that minimises borrowing, allowing more resources to be directed toward developmental activities in the long term.
