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.
NEW DELHI: Indian Finance Minister Arun Jaitley told lawmakers on Friday that he would need more money in the recent financial year to cover the cost of big pay rises for 10 million state workers and pensioners.
The government will require “some improvement” for spending on salaries and pensions in 2016/17 to attract the off-cycle pay hikes announced in June on the suggestion of a government pay commission.
The government faces a challenge to achieve its financial insufficiency target of 3.5 percent of GDP in the current financial year, but is “quite confident” of fully achieving the target of 3 percent in 2017/18, the finance ministry said in the Medium-Term expenses report tabled in parliament’s lower house.
Rating agencies such as Moody’s have said that the increase in income would improve consumer demand, most important to inflationary pressures and making it is not easy for the next chief of the Reserve Bank of India to achieve its inflation target.
Prime Minister Narendra Modi’s government has just confirmed a mid rise target of 4 percent, plus or minus 2 percentage points, that was agreed with departing governor Raghuram Rajan for the next five years.