State government asked Centre to share half the burden of pay revision of their employees, in case they go for the next salary hike. VAT panel said in its presentation to the 13th Finance Commission, “The states would never forget the effect of the Centre’s decision on recommendations of the Fifth Central Pay Commission regarding pay revision on states’ finances through consequences of pay revision at the states levels. This had resulted in a financial crisis for the states”.

The Empowered Committee of state finance ministers on VAT said that during that time, the Centre had agreed to bear half of the burden of the states but did not actually provide the assistance. The VAT panel said that the Sixth Pay Commission will “consequently cause the states to take certain decisions for the pay structure of their employees and others with serious financial implications”. Due to the Sixth Pay revision, the Centre will bear an additional burden of Rs 15,700 crore on the central budget and Rs 6,400 crore on the railway budget.