58 lakh people in Kerala await 6 months of pension; arrears hit Rs 4,600 crore

Thiruvananthapuram: The Kerala government has run up welfare pension dues to the tune of Rs 4,600 crore to date, with 58 lakh beneficiaries yet to get their pensions for the past six months since September last.

The government disbursed the welfare pension for August 2023 in December. Incidentally, this is the first time that the arrears added up to such a huge sum ever since Pinarayi Vijayan became the Chief Minister.

Meanwhile, the government is trying to spend the maximum plan funds since the current financial year will end by March 31. However, certainly, the government will not be able to clear the six-month pension arrears within this short period.

If the arrears are not cleared, the government will fail to keep the promise made in the Budget that the pensions would be disbursed in the corresponding month from the next fiscal.

The government's plan to spend at least Rs 25,000 crore in February and March for various projects hit a roadblock after the Centre put a cap on borrowings. The financial crisis would force the government to push several bills to the next financial year.

With the Election Commission of India likely to notify the Lok Sabha elections soon, the state government is considering clearing the pension arrears, at least partially. If it forms a consortium of cooperative banks, the pensions for two months could be disbursed.

The government requires Rs 775 crore to provide a month's pension. The state government has been utilising its funds, Rs 667 crore, to disburse social security pensions to 45.11 lakh people. 

Another 7.42 lakh people were provided pensions with the help of the central government. Kerala should now find Rs 19.15 crore to provide pensions to them. 

The state needs Rs 89.40 crore to provide pensions to 5.66 lakh members of various welfare fund boards. Finance Minister KN Balagopal revealed in his Budget speech that the State required Rs 9,000 crore annually to disburse the pensions.

The government could clear the pension arrears in a single go since it could borrow from the market from April. However, such a move would adversely affect other necessary expenditures. 

Additionally, a huge borrowing at the beginning of the financial year would further affect the last leg of the fiscal. The finance minister hinted at implementing Plan B, if necessary, to improve the state's revenue.

The only way for the government to control expenditure is to increase the pension age to 57 from 56, which, according to the Pay Revision Commission, could save Rs 4,000 crore a year. However, it is not clear if the Finance Minister's Plan B referred to increasing the pension age.