Government's decision to clear 7th Pay Commission recommendations will give a boost to the economy, but it may impact fiscal deficit target for fiscal 2017-18, says an SBI research report. This may impact the fiscal deficit target for 2017-18," the SBI report said. Since the 7th Pay Commission report will be effective from January 2016, the government will decide if the arrears for the six months have to be paid in one go or in instalments. "We believe the government may not able to provide the additional Rs 38,200 crore in fiscal 2016-17, which may be provisioned for the Budget 2017-18. "No doubt consumption increases with increase in income, nonetheless our study indicates that higher income on account of pay commission translates more into higher household savings than consumption," the report added.

Source: dna June 29, 2016 16:41 UTC