Madhya Pradesh’s wage, pension & debt burden swells to over 45% of revenue expenditure
MP’s Salary & Pension Bill Crosses ₹1.17 Lakh Crore, Govt Forced into Fresh Borrowing, CAG Flags Madhya Pradesh’s Financial Stress as Debt Nears ₹4.25 Lakh Crore
Pramod
FACT FILE: MP’s Fiscal Stress 2025
| Parameter | Details |
|---|---|
| Total Employee Strength (Regular, Contract, Pensioners) | Approx. 12-13 Lakh |
| Estimated Salary & Pension Expenditure (2024-25) | ₹90,548 Crore |
| Total Establishment Expenditure (2024-25) | ₹1,17,945 Crore (Approx. 45% of Revenue) |
| Total State Debt (FY 2024-25) | ₹4.25 Lakh Crore+ |
| Latest Borrowing | ₹6,000 Crore |
| Debt Servicing Cost (2024-25) | ₹30,000 Crore (Principal + Interest) |
| DA (Dearness Allowance) Currently Being Paid | 50% (3% less than Central Govt Employees) |
| Vacant Government Posts | Lakhs (Recruitment in progress) |
| CAG Report Advisory | Avoid borrowing for revenue expenditure |
Highlights of the Fiscal Strain
The Madhya Pradesh Government’s establishment expenditure — which includes salaries, pensions, and debt repayments — has surged alarmingly, consuming over 45% of the state's total revenue income in the 2024-25 fiscal year. This unsustainable financial model is now choking the state’s capacity to invest in infrastructure and welfare projects.
The government is grappling with a cumulative debt burden of over ₹4.25 lakh crore, further exacerbated by a fresh ₹6,000 crore loan recently taken to bridge the gap between revenue and expenditure.
What's Pushing the Crisis?
- The state’s salary, pension, and debt servicing bill has ballooned to approximately ₹1.17 lakh crore.
- Even with over lakhs of government posts lying vacant for years, the wage bill continues to escalate due to annual increments, DA hikes, and fresh recruitments.
- Nearly 25% of revenue receipts are being spent purely on establishment expenses, without any scope for capital creation.
- A further burden comes from 8,000-10,000 employees retiring annually, which adds to the pension load.
- The state’s finance department has already cautioned that new recruitments will further swell establishment costs, forcing departments to adjust their budgets accordingly.
CAG Red Flags
In its recent audit report, the Comptroller and Auditor General (CAG) has questioned Madhya Pradesh’s fiscal discipline. It has explicitly warned the state against borrowing money merely to fund recurring revenue expenditure like salaries and pensions, instead of capital investments or development projects.
The state currently pays 50% DA to its employees, which is 3% lower than the Central Government standard, yet the cumulative salary outgo remains staggeringly high. The finance department has advised all ministries to prepare their establishment budgets based on a projected DA of 64%.
The Development Cost
With nearly half of the revenue budget locked in non-productive expenditure, the government is left with only 55% funds for development activities — a fiscal straitjacket that could affect key sectors like health, education, infrastructure, and social welfare schemes in the coming years.
The alarming rise in fixed financial liabilities makes it evident that without drastic expenditure rationalization and revenue augmentation, Madhya Pradesh's dream of accelerating development may remain distant.
