For the first time in Himachal Pradesh, employees could not get their salary on time. In view of the financial crisis in the state, there is talk of extending the salary date. This issue is being discussed across the country. Even political allegations and counter-allegations are being made, but the question is that where does a state get the funds from, and why does a financial crisis arise.
First of all, let us know the current situation of Himachal. Announcing the new dates for salary and pension, CM Sukhvinder Singh Sukhu said that this decision has been taken to avoid the interest spent on the loan. This will save Rs 36 crore annually. The CM named it financial discipline. Another thing is that the state currently has a debt of Rs 94 thousand crore. The government is taking new loans to repay the old loans.
A similar situation was seen in Bihar during Lalu Prasad Yadav’s tenure. Government employees had to wait for months for their salaries. The situation was more or less the same in UP during the nineties. This was a period of political and economic instability, when there was reportedly no money left in the state’s treasury.
Where do states get the money from?
Tax is its biggest source. Every state has the right to levy many types of taxes, there are many categories like GST, land revenue, state excise duty, tax on vehicles, entertainment tax etc. A large part of the treasury comes from here. Governments also earn interest by investing their financial resources.
The center also helps
The Centre provides financial assistance to every state according to its geographical location and population. This assistance is given for different schemes, to complete the Centre’s plans and to cover the revenue deficit. The Centre also provides interest-free loans to the states as per their requirement. But there are certain conditions with every loan like completing the plans on time. There are also different types of funds, like to cover the losses caused by disaster. These are given in lump sum and in installments.
How do government employees get salary?
A large part of it comes from revenue. Governments prepare a budget every year, in which administrative budget is also a part. People get their salaries from this. Similarly, there is a separate allocation for pension. A part of the grant received from the center is also used in this.
How does a financial crisis come?
States receive money from many sources. But sometimes due to unequal distribution of money, the treasury gets depleted. Many times governments insist on certain schemes for vote bank, which causes more loss than benefit. Even if the state has borrowed a lot and the capacity to repay the loan is low, the interest keeps increasing. Sometimes such situations arise which no one has even thought of, like the period of Covid. In such a situation, apart from the Center, the burden was also on the states. Natural calamities like flood, earthquake or tsunami also increase the difficulty, even though money comes from the Center for this.
what happened in bihar
During Lalu Prasad Yadav’s tenure as CM, the graph of economic crisis in the state had gone up a lot. Leaders and officers were accused of administrative negligence. Due to the huge revenue deficit, the state started taking more loans. In this way, a chain was started. To overcome this, the then government adopted different methods instead of investing in development. The result was that even government employees started getting late in getting their salaries.
Later, Nitish Kumar’s government focused on development. Tried and tested methods of infrastructure and revenue were adopted. Various schemes were introduced. This brought the deficit under control to a great extent.
Source (PTI) (NDTV) (HINDUSTANTIMES)