The Telegraph
Since 1st March, 1999
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TN seeks golden handshake loan

Chennai, Jan. 5: The Tamil Nadu government is in talks with multilateral lending agencies like the World Bank and the Asian Development Bank for a soft loan to fund a voluntary retirement scheme for government employees.

But its plan to cut staff strength by 30 per cent looks a tall order. More than a year after making clear its downsizing intent, the government is yet to put a finger on the number that could be reduced without major turmoil.

The proposed manpower reduction over a five-year period has several hurdles to overcome. Government sources said one basic problem was that of the nearly 12.61 lakh employees, “core staff”, including teachers, doctors, policemen and officials of other essential services, makes up about 6 lakh.

This leaves the government to tinker mostly at the level of section officers and below. So the government is still unsure about where to start pruning.

But sources explained that negotiations with the lending agencies would be independent of the tortuous process of identifying surplus staff as any offer of VRS would first require the availability of sizeable funds.

Stating that “fiscal reforms” were not necessarily about reducing government expenditure, the sources said the reduction in staff could not be wished away. The reasons are not hard to seek. The current financial year’s salary and pension bill has been budgeted at Rs 3,175 crore, nearly 94 per cent of the state government’s revenues, sources said.

Pension commitments in particular — the state pension scheme is said to be more attractive than the Centre’s — have been growing at an incredible rate of 30 per cent over the past five years, the sources added.

In the next fiscal, the pension bill alone was expected to mount to Rs 4,000 crore. Unless the state initiated a staff reduction programme at some point, “we would soon reach a stage where we can pay only pensions”, said a top government official.

Another worry for the Jayalalithaa government is paying arrears of Rs 2,000 crore in the next fiscal for the Centre’s pay commission recommendations. The previous DMK government had withheld 60 per cent of the arrears in pay and allowances for its staff and pensioners.

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