Pay hike: Experts warn on deficit; govt confident of targets
November 20, 2015  18:59
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Rating agencies and brokerages today said the proposed 23.6 per cent hike in salaries and pensions of government employees could hurt India's finances even as the Centre expressed confidence that the fiscal deficit targets will not be breached. Minister of State for Finance Jayant Sinha said he was confident that the government will stick to fiscal consolidation laid out in the Budget.


However, rating agencies such as Fitch and S&P as well as brokerages like Citi warned that implementation of 7th Pay Commission's recommendations will impact the deficit. Fitch Ratings said the Rs 1.02 lakh crore additional burden on the Centre, if the recommendation are implemented in toto, could challenge the government's goal of achieving a fiscal deficit of 3.5 per cent in 2016-17 unless expenditure is cut or revenues raised.
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