Fiscal impact of 7th Pay Commission under watch: DBS
Bulk of the impact of Seventh Pay Commission, under which salaries of government employees will be reviewed, is likely to be absorbed by the Budget of the next financial year, 2016-17, says a DBS report.
Bulk of the impact of Seventh Pay Commission, under which salaries of government employees will be reviewed, is likely to be absorbed by the Budget of the next financial year, 2016-17, says a DBS report.
The global financial services major said pay/allowances could rise by 16 per cent following the rollout of the Seventh Pay Commission.
“If adopted, bulk of the impact (of the Seventh Pay Commission) will be absorbed by the FY16/17 Budget,” the DBS report said adding that “historically, the pay commission’s rollout has been negative for fiscal balances.”
As per DBS, the increase in bonus payments and pay/ allowances would cumulatively imply a first-round increase in spending to the tune of 0.2-0.3 per cent of GDP in FY16/17, “putting deficit targets at risk”.
“These higher spending needs will require the government to either re-channel fiscal savings, restrain spending elsewhere or renege on the fiscal deficit targets,” it added.
The Seventh Pay Commission, set up by the government to revise remuneration of about 48 lakh central government employees and 55 lakh pensioners, will submit its report by December 31.
DBS said that the full impact would get clearer when the pay commission tables its recommendations later this year.
The recommendations of the Seventh Pay Commission are scheduled to come into effect from January 1, 2016…
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