At a time when its finances are precarious with almost empty coffers, the Tamil Nadu government seems to have decided to ‘postpone’ its financial burden. The Tamil Nadu government on Thursday increased the retirement age of its employees, including teachers and PSU workers, from 58 years to 59.
In a statement issued on Thursday, the government increased the retirement age from 58 to 59. The order comes into immediate effect and will apply for all teachers in schools, colleges and government-aided schools and employees with public sector units (PSUs). While the government did not give any reason for the increase in the retirement age, sources in the state’s finance department attributed it to the precarious situation of the state’s finances.
“This is just to postpone the financial burden of the state. This only means that the financial commitment of the state will increase,” Professor. J Jeyaranjan, director, Institute of Development Alternatives, told THE WEEK. Even as the need for funds to fight the COVID-19 pandemic were eating into the state exchequer, the government’s main sources of revenue like commercial taxes, registrations and sale of liquor saw a complete shutdown for the past 45 days.
While the registration department was opened a few days ago, the liquor shops have just begun to function and the quantum of income from the liquor shops may not be enough to meet the expenditure in the next few months. According to sources, at least 30,000 government employees, including teachers and PSU workers, are due to retire from May 2020 to April 2021. Approximately, if the retirement benefit on average is Rs 20 lakh per person, this move can only save Rs 6,000 crore, which is very small portion of the total amount spent on salaries.
According to the data available with the state government, if the retirement age had continued to be 58, at least 20 percent of the total government employees would retire in the next three years, starting from 2020.
As per the budget in 2020-21, Tamil Nadu is estimated to spend Rs 1.36 lakh crore towards committed expenditure, that is, payment of salaries, pensions and interest. This is 13.2 percent higher than the revised estimate of 2019-20, which stood at Rs 1.20 lakh crore. Apparently, in January 2019, when the teachers went on a strike demanding salary hike, Personnel and Administration Minister D. Jayakumar gave a detailed explanation, saying that their demands can’t be met. He pointed out the amount spent on salaries, pensions, administrative expenses and interest payments were eating into the government revenues. Stating that these consume 71 per cent of the government expenses, Jayakumar said the government would need an additional Rs.20,000 crore to meet the recommendations of the Seventh Pay Commission.
“We have decided to go on a protest against this decision of increasing the retirement age. The government had already frozen our Dearness Allowance (DA) and our leave salary. In such a situation, increasing the retirement age is nothing but refusing retirement for us at the prescribed age. This will only take away the rights of youngsters who are waiting to be recruited,” tells M. Anbarasu of Tamil Nadu Government Employees Association. Stating that this move will not in any way reduce the burden on the state’s finances, Anbarasu points out that this will only make the employees who are expecting promotions to wait for yet another year.
With net outstanding debt of Tamil Nadu expected to increase to over Rs 4.56 lakh crore in 2020-21, from Rs 3.97 lakh crore projected for 2019-20, the state’s coffers are almost empty. According to the state’s budget estimated presented by Deputy Chief Minister O. Panneerselvam in February, the salary and pension-related expenses of the state government have seen a consistent increase.
