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Speaking on crucial aspects of the Indian economy, FM Arun Jaitley in a recent speech he was not unduly worried about fiscal deficit and government would be able to meet its target despite additional outgo towards the implementation of the 7th Pay Commission report recommendations. "I am not particularly worried about the fiscal deficit target," he said while replying to questions on the impact of the recommendations on public finances. Here are 5 things to note in Arun Jaitley speech: (Express photo by Dilip Kagda Mumbai)
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1. Arun Jaitley admitted that the impact of implementing the 7th Pay Commission recommendations will result in an additional annual burden of Rs 1.02 lakh crore on exchequer that would last for two to three years. (Express photo by Prem Nath Pandey)
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2. Arun Jaitley said, "The normal rule is that the expenditure on salary and pension should be 2.5 per cent of the Gross Domestic Product. The ratio will deteriorate in the initial years with the implementation. However, as the base of the GDP increases, by the third or the fourth year, the spikes come down and (thereafter) you reasonably reach that 2.5 per cent figure back… These pressures will be for the next 2-3 years." (Express photo by Tashi Tobgyal)
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3. Arun Jaitley said that besides achieving the target, the government has also been able to improve the quality of fiscal deficit. The government proposes to bring down the fiscal deficit to 3.9 per cent of GDP in 2015-16, 3.5 per cent in 2016-17 and 3 per cent by 2017-18. (Express photo by Anil Sharma)
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4. Arun Jaitley said, "If you achieve a fiscal deficit by either cutting down expenditure or withholding tax returns, then you may strictly have a statistical figure, but the quality of the fiscal deficit will always be suspected…we have concentrated on the quality of the fiscal deficit and we will probably be able to maintain it." (Express photo by Renuka Puri)
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5 Arun Jaitley said, "The Indian 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 revenues for the government". (Express photo by Dilip Kagda Mumbai)
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