Fiscal 2016-17 is going to be “challenging” with the One Rank, One Pension (OROP) scheme and the Seventh Pay Commission putting pressure on the government’s expenditure, according to the Economic Survey 2015-16.
“The implementation of the Pay Commission recommendations and the One Rank, One Pension (OROP) scheme will put an additional burden on expenditure,” the Survey said.
As a result, the Survey recommended identifying alternative sources for revenue generation by way of improved tax compliance/better tax administration in an effort to keep the fiscal deficit in line with the revised roadmap.
The Seventh Pay Commission has recommended that government wages and allowances be increased significantly.
Full implementation of this pay would add about half a per cent of GDP to the Centre’s wage bill.
As per the fiscal consolidation roadmap laid out by the government, the deficit is to be brought down to 3.9 per cent of GDP in the current fiscal from 4.1 per cent in the last financial year of 2014-15.
The target for 2016-17 is to bring it down further to 3.5 per cent.
The survey, however, said the fiscal deficit target of 3.9 per cent to GDP, is achievable on the back of the “pattern of revenue and expenditure” in the first nine months of fiscal year 2015-16. Business Line