(IANS) The Indian cabinet-approved Seventh Central Pay Commission recommendations will boost the demand in the economy by over Rs 45,000 crore and increase savings by more than Rs 30,000 crore, American agency Fitch’s subsidiary India Ratings and Research (Ind-Ra) said on Wednesday.
“The pay commission recommendations will boost consumption to the economy by Rs 451.1 billion (0.30 per cent of GDP) and increase savings by Rs 307.1 billion (0.20 per cent of GDP),” Ind-Ra chief economist Devendra Pant said in a statement here.
Announcing the cabinet approval to reporters here, Finance Minister Arun Jaitley estimated the “recurring burden” on central government finances this year on account of implementation of the pay panel report, including arrears payment of Rs 84,933 crore.
“The pay commission burden for this fiscal has been estimated at Rs 1,02,100 crore. The arrears for January 1 (2016) to April 1 will be an additional Rs 12,000 crore,” the minister said.
Ind-Ra said it does not see any immediate threat to inflation due to the pay commission award.
“Though consumer price inflation may inch up somewhat due to higher prices of services, impact on wholesale price index is likely to be muted due to the counter- balance provided by the deflation in commodity prices and the availability of excess capacity in several manufacturing sectors,” the statement said.