In an interview with BloombergQuint’s Nikunj Ohri, the Chief Economic Advisor to the Government of India, Arvind Subramanian said the Rs 1.02 lakh crores in higher wages to government employees will have no significant impact on India’s fiscal deficit, expected to be 3.5 percent in fiscal year 2016-17.
On Thursday, the Union Cabinet accepted the Seventh Pay Commission’s recommendations on higher salaries and benefits for all central government employees. Subramanian said the increase in salaries has been provided for in the budget.
Regarding concerns over the imminent maturing of Foreign Currency Non Resident (Bank) or FCNR(B) accounts and subsequent dollar outflows, Subramanian said there is a low possibility that third parties will fail to deliver dollars in forwards market, and that the Reserve Bank of India has enough reserves to deal with contingencies.
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