Chidambarams Real Balance Sheet ; the Government Is in a Generous Mood. Close On the Heels of the Rs 60,000-Crore Farm Loan Waiver Package Announced in the 2008-09 Union Budget Comes the Recommendations of the Sixth Pay Commission, Which Are Likely to Be Accepted.

Summary

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The government is in a generous mood. Close on the heels of the Rs 60,000-crore farm loan waiver package announced in the 2008-09 Union Budget comes the recommendations of the Sixth Pay Commission, which are likely to be accepted. This will cost the central exchequer Rs 30,621 crore. Between now and May 2009, there are 10 Assembly elections and the next General Elections to be won, so the political imperatives behind the government's generosity are, perhaps, understandable.

But the question is: can it ensure that these gifts will not adversely impact the fiscal situation? Says D.K. Joshi, Principal Economist, CRISIL: It's definitely going to hurt the fiscal consolidation process and make it difficult for the government to meet its FRBM targets.

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Extract

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Chidambarams Real Balance Sheet ; the Government Is in a Generous Mood. Close On the Heels of the Rs 60,000-Crore Farm Loan Waiver Package Announced in the 2008-09 Union Budget Comes the Recommendations of the Sixth Pay Commission, Which Are Likely to Be Accepted.

Finance Minister P. Chidambaram has emphasised several times that he has enough head room to fund the increased pay for civil servants and bankroll the farm loan waiver. He, too, is referring...

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