Government Warns of Impact from Seventh Pay Commission
The government on Friday warned that the fiscal outlook for next fiscal year (2016-17) remains challenging. In its mid-term economic review, the government said that the impact of the recommendations of the Seventh Pay Commission will be seen next fiscal year.
The government will have to take a hit of over Rs 1 lakh crore per year if the recommendations of the Seventh Pay Commission are accepted. Economists said that the pay panel proposals are likely to be implemented next fiscal.
The government also lowered its growth forecast for the fiscal year ending in March 2016 to 7-7.5 per cent from 8.1-8.5 per cent estimated in February. The revision came after Asia’s third-largest economy grew 7.2 per cent in the first half of the 2015/16 fiscal year.
In its mid-year economic review presented in Parliament, the Finance Ministry said though the economy has made considerable progress, yet challenges remain.
The government said that it will stick to its budgeted fiscal deficit target of 3.9 per cent of GDP for the fiscal year ending in March 2016.