Finance Minister Arun Jaitley on Friday said that 7th Pay Commission report would not upset the fiscal deficit targets. “The Government is using more than three-fold increase in cess on petrol and diesel to fund infrastructure projects like highways, but it will be a challenge to fund higher social sector spending due to increased outgo on salary and pension. So I think 7th Pay Commission report will not upset the fiscal deficit targets of the Government,” Jaitley told the reporters while speaking at the Hindustan Times leadership Summit on Friday.
Jaitley, however, said the impact of the 7th Pay Commission recommendations for higher salary and pension for the central Government employees, which will result in an additional annual burden of Rs 1.02 lakh crore on exchequer, would last for two to three years.
“The recommendations are to be implemented from January 1. I am not particularly worried about the fiscal deficit target. The Government was confident of keeping spending within the targeted fiscal deficit of 3.9 per cent for the current fiscal year ending March 31, 2016. Besides meeting the target, the quality of fiscal deficit too will be improved,” he added.
Jaitley expressed optimism that the economy would grow by 7.5 per cent in the current fiscal and the rate would accelerate further in the coming years resulting in more revenue for the Government.
“If you achieve a fiscal deficit by either cutting down expenditure or withholding tax returns, then you may strictly have statistical figure, but the quality of the fiscal deficit will always be a suspect. We have concentrated on the quality of the deficit and we will probably be able to maintain it,” Jaitley said.