The Finance Minister said that the macro-economic scenario has improved on the back of higher GDP growth and lower inflation.
The Government on Wednesday said it is committed to pursuing subsidy reforms by efficient targeting of subsidies to the poor and needy, while saving the ‘scarce financial resources’ for infrastructure and development needs.
In his Medium-Term Expenditure Framework Statement tabled in Parliament, finance minister Arun Jaitley said that it was essential to gradually reduce expenditure on subsidy through reforms to meet fiscal deficit targets but admitted that the Seventh Pay Commission award “poses a risk”.
The outlay on salary of government employees is estimated to go up to INR 1.28 lakh crore in FY18 from INR 1 lakh crore in the current fiscal year (FY16). Separately, pension outgo is estimated to rise to INR 1.02 lakh crore in FY17 and INR 1.12 lakh crore in FY18 from INR 88,521 crore this year.
The Finance Minister said that the macro-economic scenario has improved on the back of higher GDP growth and lower inflation. “With fiscal deficit coming down, and easing of inflationary pressure, it is expected that interest rates would fall in years to come,” Jaitley said.