Indian
Finance Minister Arun Jaitley told lawmakers on Friday that he would need more
money in the current fiscal year to cover the cost of big pay rises for 10
million state workers and pensioners.
The
government will require "some enhancement" for spending on salaries
and pensions in 2016/17 to absorb the off-cycle pay hikes announced in June on
the recommendation of a government pay commission.
The
government will require "some enhancement" for spending on salaries
and pensions in 2016/17 to absorb the off-cycle pay hikes announced in June on
the recommendation of a government pay commission.
The
government faces a challenge to achieve its fiscal deficit target of 3.5
percent of GDP in the current fiscal year, but is "quite optimistic"
of fully achieving the target of 3 percent in 2017/18, the finance ministry
said in the Medium-Term Expenditure report tabled in parliament's lower
house.
Rating
agencies such as Moody's have said that the increase in wages would boost
consumer demand, leading to inflationary pressures and making it difficult for
the next governor of the Reserve Bank of India to achieve its inflation
target.
Prime
Minister Narendra Modi's government has just confirmed a central inflation
target of 4 percent, plus or minus 2 percentage points, that was agreed with
departing governor Raghuram Rajan for the next five years.
Total
federal spending on salaries and pensions is estimated to rise about 10 percent
in the next fiscal year to 2.58 trillion rupees ($38.6 billion) compared with
budget estimates for the current fiscal year.
Source:-The
Economic Times
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