Mumbai : Stressing on the need to protect the quality of fiscal deficit, RBI Governor Raghuram Rajan said that implementing the recommendations of the 7th pay commission is a hard task but not impossible. He said the hike in pay of central government employees will not upset the fiscal maths as additional expenditure will be offset by either surplus revenues or cut in spending. Budgetary tightening from next fiscal onward will ensure that the government stays on the fiscal consolidation road- map, under which it has promised to reduce the deficit to 3.5 per cent in 2016-17 from 3.9 per cent this fiscal, he said. “It is a difficult task the government has ahead of it, but by no means it is impossible,” Rajan told analysts on the customary post-policy review call.
As the government gears up to meet the fiscal deficit target, which has already touched 74 per cent of the full year target as of end October according to government data released yesterday, Rajan warned that the quality of the deficit should not be compromised and greater focus should be laid on capital expenditure rather than meeting current expenses like wages.