ISLAMABAD, May 21: The provincial governments are opposing an increase of more than 20 per cent in salaries and pensions of government employees.

A senior government official said on Monday that a 15 per cent ad hoc relief in salaries and pensions of federal government employees would put an additional burden of Rs34 billion. A one per cent increase in salary and pension translate into an additional burden of Rs2.2 billion on the federal government and almost double that amount on the Punjab government.

The Punjab government will have to bear an additional impact of about Rs70 billion in case of a 15 per cent increase and the three other provinces Rs35-50 billion.

The provincial governments, the official said, had cautioned the federal government against announcing any unrealistic increase in salaries and pensions because the provinces would have to provide the same relief. Such a step could wipe out their increased share of revenues arising out of higher transfers under the seventh National Finance Commission award.

Against this background, the finance ministry is working on a 15 per cent increase that may be raised to a maximum of 20 per cent in case it comes under pressure from the political leadership. The fiscal space, the finance ministry official argued, was quite limited and hence the ad hoc relief would be kept below 20 per cent in all circumstances.

However, the government is considering to increase medical allowance by about Rs200-400 per month over the existing limit of Rs1,000 for employees up to pay scale 1-15.

The medical allowance for officers in grade 16 and above may also be increased from 15 per cent of the basic pay to about 20per cent. Another proposal under consideration, the official said, was to increase house rent allowance but a final decision had not been taken.