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Bengaluru: The Karnataka cabinet on Monday approved implementation of the Seventh Pay Commission’s recommendations, effecting a 27.5% increase in basic pay from August 1, 2024, and benefiting 12 lakh state govt employees and pensioners.

The commission, led by former chief secretary K Sudhakar Rao, was constituted in November 2022 with a six month mandate.

The final report was submitted to chief minister Siddaramaiah before Lok Sabha elections were announced in March 2024.

The commission’s recommendations include raising the minimum salary for govt employees from Rs 17,000 to Rs 27,000 a month.

The implementation is expected to widen the revenue expenditure of the Karnataka govt by Rs 20,000 crore annually. The most considerable expenditure will be the burden of Rs 7,409 crore for salaries, followed by Rs 3,791 crore for pensions and family pensions each year.

The decision comes after the previous BJP govt, just before the 2023 assembly elections, granted interim relief with a 17% salary hike for govt employees, leaving the remaining 10.5% for future discussions.

After Congress govt took office, it faced pressure to fulfil five poll guarantees and delayed the decision.

The employees, during an executive committee meeting held recently in Chikkamagaluru, decided to launch a three-phase protest culminating in an indefinite strike planned from July 29. This appears to have pressured the govt.

"We welcome the decision for providing employees with 27.5% salary hike," said Shadakshari, state president of Karnataka state govt employees' association.

New Delhi: The Centre has ruled out any plan to give a special category status to Bihar, a core demand by its key ally, the Janata Dal (United), prompting the Rashtriya Janata Dal to take a swipe at JDU leader and Bihar Chief Minister Nitish Kumar.  

Ramprit Mandal, JDU MP from Bihar's Jhanjharpur, had asked the Finance Ministry if the government has a plan to provide special status to Bihar and other most backward states to promote economic growth and industrialisation.

In a written response, Minister of State for Finance Pankaj Chaudhary said "case for Special Category Status for Bihar is not made out".

"The Special Category Status for plan assistance was granted in the past by the National Development Council (NDC) to some States that were characterized by a number of features necessitating special consideration. These features included (i) hilly and difficult terrain, (ii) low population density and/or sizeable share of tribal population, (iii) strategic location along borders with neighbouring countries, (iv) economic and infrastructural backwardness and (v) non-viable nature of State finances," the reply stated. "Earlier, the request of Bihar for Special Category Status was considered by an Inter-Ministerial Group (IMG) which submitted its Report on 30th March, 2012. The IMG came to the finding that based on existing NDC criteria, the case for Special Category Status for Bihar is not made out," it added.

A special status ensures more central support to a backward state to expedite its growth. While the Constitution does not provide for a special status for any state, it was introduced on the recommendations of the Fifth Finance Commission in 1969. Among the states that have received a special status so far are Jammu and Kashmir (now a Union Territory), Noreastern states and hill states such as Himachal Pradesh and Uttarakhand.

A state with a special category status gets more funding support from the Central in the Union government's schemes and several concessions in taxes.

A special status for Bihar has been a longstanding demand of the JDU. With the BJP falling short of a majority in this election and tying up with JDU, TDP and other parties to cobble up the magic figure, the Nitish Kumar-led party was expected to push hard for its core demand. The JDU also raised this demand at an all-party meeting before the budget session.

JDU MP Sanjay Kumar Jha said the demand for a special state status for Bihar has been a priority for the JDU. "Bihar should get the status of a special state, this has been the demand of our party since the beginning. Chief Minister Nitish Kumar has held big rallies for this demand. If the government feels that there is a problem in doing this, then we have demanded a special package for Bihar," he said, according to a PTI report.

With the Centre making it clear that it has no plan to grant a special status, Bihar's main Opposition RJD has hit out at the JDU, which is ruling the state in alliance with BJP. "Nitish Kumar and JDU leaders must enjoy the fruits of power at the Centre and continue their drama politics on special status," the RJD said in a post on X.

A source in the government said that the Special Category Status issue was first addressed in the National Development Council meeting in 1969. "During this meeting, the D R Gadgil Committee introduced a formula to allocate Central Assistance for state plans in India. Prior to this, there was no specific formula for fund distribution to States, and grants were given on a scheme basis. The Gadgil Formula, approved by the NDC, prioritized special category States such as Assam, Jammu & Kashmir, and Nagaland, ensuring their needs were addressed first from the pool of Central assistance."

The Special Category status concept was introduced by the 5th Finance Commission in 1969 recognising historical disadvantages of certain regions, the source said.

"Until the 2014-2015 fiscal year, the 11 States with Special Category Status benefited from various advantages and incentives. However, following the dissolution of the Planning Commission and the formation of the NITI Aayog in 2014, the recommendations of the 14th Finance Commission were implemented, leading to the discontinuation of Gadgil Formula-based grants. Instead, the devolution from the divisible pool to all States was increased from 32% to 42%," the source added.

Currently, no additional States are being granted Special Category Status, as the Constitution does not provide for such categorisation, said the source in the government.

Bengaluru: The Karnataka cabinet on Monday approved implementation of the Seventh Pay Commission’s recommendations, effecting a 27.5% increase in basic pay from August 1, 2024, and benefiting 12 lakh state govt employees and pensioners.

The commission, led by former chief secretary K Sudhakar Rao, was constituted in November 2022 with a six month mandate.

The final report was submitted to chief minister Siddaramaiah before Lok Sabha elections were announced in March 2024.

The commission’s recommendations include raising the minimum salary for govt employees from Rs 17,000 to Rs 27,000 a month.

The implementation is expected to widen the revenue expenditure of the Karnataka govt by Rs 20,000 crore annually. The most considerable expenditure will be the burden of Rs 7,409 crore for salaries, followed by Rs 3,791 crore for pensions and family pensions each year.

The decision comes after the previous BJP govt, just before the 2023 assembly elections, granted interim relief with a 17% salary hike for govt employees, leaving the remaining 10.5% for future discussions.

After Congress govt took office, it faced pressure to fulfil five poll guarantees and delayed the decision.

The employees, during an executive committee meeting held recently in Chikkamagaluru, decided to launch a three-phase protest culminating in an indefinite strike planned from July 29. This appears to have pressured the govt.

"We welcome the decision for providing employees with 27.5% salary hike," said Shadakshari, state president of Karnataka state govt employees' association.