Pay panel award to put pressure on finances: RBI

Agencies
Posted: 2008-09-04 19:41:15+05:30 IST
Updated: Sep 04, 2008 at 1941 hrs IST

Font Size

Feedback

Discuss

India will achieve export target this fiscal: Pill...India will achieve export target this fiscal: Pill...Pay panel award to put pressure on finances: RBI

The RBI on Thursday warned that the government finances will come under pressure due to the Sixth Pay Commission, as also farm-loan waiver and subsidies, and said it will continue tight monetary policy even as inflation eased for the second successive week to 12.34 per cent.

"The finances of the Central Government may come under pressure during 2008-09 on account of implementation of the Sixth Pay Commission award including payment of arrears, higher oil subsidies, increase in fertiliser subsidy due to a sharp rise in the price of raw materials and fertiliser in the international market," RBI said in its report on Currency and Finance 2006-08.

In addition to this, the RBI further said that volatile food and energy prices are other causes of concern that call for attention on urgent basis.

Projecting an eight per cent economic growth, the bank said that the overall stance of monetary policy would be to ensure a monetary and interest rate environment that accords a high priority to price stability.

"It is critical at the prevailing juncture to demonstrate on a continuing basis a determination to act decisively, effectively and swiftly to curb any signs of adverse developments in regard to inflation expectations," the RBI stressed.

The Reserve Bank has gradually raised the Cash Reserve Ratio (CRR) and reserve repo rate to nine per cent to tame rising inflation.

While sounding a word of caution on going ahead with fuller capital account convertibility of rupee by 2011, the report said, "The banking sector requires to develop appropriate capabilities to manage the varied and enhanced risks".

Post Comments

Comments: (Limit 3,000 characters)

Name		Message
Email ID
Subject

TERMS OF USE:
The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).

I agree to the terms of use.

Comments

» Funds with Govt

Posted by Sahebrao on 2008-09-04 20:47:39.743646+05:30
I think, Govt will not cause concern over the finances due to implementation of sixth pay commission and farm-loan waiver. Because, Govt had already made enough allocation for all these. This is not an unplanned expenditure. Everything had already planned by the Govt, so Govt can easily tackle all these issues easily and no pressure will come on finances. One has to note here one thing is that, Govt had imposed many new taxes during its tenure and had collected enough money from all these new taxes. So, nothing is to be worried.

Reply Forward

Latest News

Print Edition

Events

Pay panel award to put pressure on finances: RBI

Post Comments