Implementation of 7th Pay Commission to impact govt’s fiscal math: Deutsche Bank
NEW DELHI: Implementation of the Seventh Pay Commission recommendations is likely to exert pressure on the government’s fiscal finances and inflation trajectory going forward, says a Deutsche Bank report.
According to the global financial services firm, the government is likely to meet its fiscal deficit target for the fiscal but may settle for a higher fiscal deficit target of 3.8 per cent for 2016-17.
“It will be difficult for the government to absorb the likely 0.5 per cent of GDP worth incremental increase in wage bill and also attempt to bring the fiscal deficit down to 3.5 per cent of GDP in FY17, as per the revised medium-term fiscal consolidation plan,” Deutsche Bank said in a research note.
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