The move by AP government comes days after the Telangana government announced a 43 percent hike for its employees, who were on the forefront of the separate statehood agitation. The hike in Telangana, too, is to be implemented with retrospective effect from June 2, 2014.

According to rough estimates, the "43 percent fitment" for AP government employees would result in the present pay being almost doubled. The "fitment" is calculated as per a formula that involves basic pay and dearness allowance.

Replying to a query, Naidu said that the hike would cause a burden of over Rs 9,254 crore to the AP exchequer.

Naidu's announcement came after a meeting between the Cabinet sub-committee on pay revision and leaders of employees' unions.

He said that the sub-committee would sit with the employees' representatives and work out all details regarding the hike.

Saying that AP is faced with poor finances due to what he charged was a "faulty bifurcation", Naidu said that the state government would have to improve its finances and, to that end, sought the co-operation of government employees.     

Expressing gratitude for the substantial pay hike, AP Non-Gazetted Officers' Association (APNGOA) leader P Ashok Babu said state government employees are ready to work hard for the state's progress.

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