Punjab pushes Centre to reverse its decision

ISLAMABAD: Punjab’s ruling party is maneuvering to get reversed the Central government’s decision of a 50 per cent increase in salaries of government employees, arguing that Lahore does not have fiscal space to implement the announcement.

The Punjab government, led by the PML-N, is arguing that it is unable to allocate more than 12 per cent of its total budget for payment of salaries. It has demanded the federal government either change the decision or share the additional cost with the provincial government, said a senior PML-N leader.

PML-N’s central leader Senator Ishaq Dar said that the Punjab government cannot implement the decision of 50 per cent increase in salaries of employees, as it would cost it Rs47 billion.

Dar said the Centre can afford to give 50 per cent raise in salaries but the provincial government cannot allocate 12 per cent of its total budget for paying salaries of government employees.

The federal government has announced a 50 per cent increase in the salaries of government employees from the next fiscal year. Finance Secretary Salman Siddique said in the post-budget press conference that the increase would be on running salaries.

The decision to raise salaries by 50 per cent would cost over Rs100 billion. The Centre would bear a cost of Rs40 billion, Punjab Rs40 billion and other three provinces would bear over Rs20 billion.

“Under the 7th National Finance Commission Award the Punjab government would get additional resources of Rs42 billion excluding the General Sales Tax share,” said Dar, who was the first finance minister of the PPP-led government before his party pulled out of the ruling coalition on the issue of the judges’ restoration.

He said still there was confusion whether the 50 per cent increase would be applicable on the basic pay or on the running basis. “Before taking any political decision with financial implications we must also see the sustainable fiscal space,” he added.

However, Punjab’s Finance Minister Tanvir Ashraf Kaira, who belongs to the PPP, does not have any problem with the 50 per cent increase in salaries. “As a finance minister I am comfortable with the 50 per cent increase and will not recommend the government to ask the Centre for reversing or modifying the decision,” said Kaira.

Kaira said that the Punjab government would get an additional Rs 70 billion under the 7th NFC Award and the increase in salaries would cost it Rs40 billion. “In any way the government had to give 25 per cent raise in salaries and the additional 25 per cent would cost Rs 20 billion that can be borne for the sake of people.”

Another senior official of the Punjab government said that province did not have any financial problem. “The problem is that it does not want to give a credit to the PPP government,” he added.

Published in the Express Tribune, June 10^th, 2010.