PENSION BILL IN INDIA

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Context

• Expenditure on pension has emerged as one of the major components of the Committed Expenditure of the Centre and states in recent years. In fact, it was higher than the ‘salary and wages’ expenditure of the Centre and three states – including Gujarat – during 2019-20, according to official data of Comptroller and Auditor General of India.

Details

• According to data available with the Comptroller and Auditor General of India (CAG), the Centre’s total Committed Expenditure was Rs 9.78 lakh crore during 2019-20, which 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 total Committed Expenditure accounted for 37 per cent of its total revenue expenditure of Rs 26.15 lakh crore in 2019-20.
• 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. The Expenditure on pensions is more than the expenditure on salaries and wages - CAG report titled ‘Union and State Finances at A Glance’ for 2019-20.

Implications

• The expenditure on pension is one of the key components of the government’s Committed Expenditure. The other two are the expenditure on salary and wages and interest payment and servicing of debt. 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.

https://indianexpress.com/article/india/pension-bill-exceeded-salary-wages-spending-for-centre-3-states-cag-data-8305972/