New Delhi: Finance Secretary TV Somanathan has cautioned the states who are reverting to old pension schemes saying it could have implications for future government.

Somanathan emphasised the need to keep up the pace of the increase in revenue expenditure for making interest payments and paying pension and subsidies lower than the nominal growth rate of the economy.

Some states like Rajasthan, Jharkhand, Chhattisgarh and Himachal Pradesh have opted out of the contributory New Pension schemes that offers 50% of the last pay drawn to retired government employees.

Pension and interest payments are seen as non-productive expenditures of the government. Yet, the Centre and states cannot walk away from them due to their commitments.

For 2023-24, the Centre has budgeted for a mere 1.2% rise in revenue expenditure by containing the food and fertiliser subsidy.

Somanathan defended the allocations by arguing that they were realistic and may not breach the budget estimates. He said that in the medium to long term, there is a need to ensure that revenue spent was lower than the nominal GDP growth rate. Other than the priority schemes the size of central government schemes is growing at a moderate pace, he informed.

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