NEW DELHI: The government has said the seventh pay commission award will not impact its finances as higher economic growth next year should help fund this extra burden of Rs 1.02 lakh crore, as it sought to quell concerns about the pay commission recommendations on the fiscal.
The pay commission award is from Januray 1. 2016 but it is likley to be implemented from next years and employees paid arrears.
'By the time it is implemented, it goes into next financial year and our growth prospects are good, our economy is pretty robust', finance secretary Ratan Watal said.
"We will handle this,'' he added.
The revised fiscal consolidation roadmap laid out by the government sees fiscal deficit falling to 3.5% of GDP in FY17 and 3% of GDP in FY18.
"Considering the rise in wage expenditure by ~0.5% of GDP next fiscal and a likely reduction in corporate tax rate, the central government's target to reduce fiscal deficit from 3.9% of GDP in FY16 to 3.5% in FY17 becomes even more challenging," Citi said in a report raising concerns over the fiscal impact of the award.
The Seventh Pay Commission has suggested a 23.6% rise in pay of 47 lakh central government employees. Its 52 lakh pensioners willl get 24% increase.
The government has set up a committee to review the recommendations.
Source : economictimes.indiatimes.com
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