Challenges to fiscal consolidation are GST, loan waivers and pay revisions: RBI

The central bank predicted that a normal monsoon and the lowering of bank lending rates could spur the investment demand.

Fiscal consolidation may be under pressure due to the recently implemented goods and services tax (GST) law, loan waivers and pay revisions, said the annual report of the Reserve Bank of India (RBI).
 
The central bank predicted that a normal monsoon and the lowering of bank lending rates could spur the investment demand.  
 
However, the aggregate demand could be offset if state governments rein in capital spending, keeping in view the objective of fiscal consolidation.
 
The government has changed its deadline for achieving a fiscal deficit target of 3 per cent of GDP to 2018-19 from 2017-18.
 
RBI has said that near-term uncertainties with regard to revenue mobilization after GST roll-out coupled with rising committed liabilities of states could breach of fiscal deficit targets.
 
As per the report, the committed liabilities of states may increase in case they decide to implement the recommendations of their own pay commissions in the current fiscal year.
 
Source: ET.com

Event date: 
Thursday, August 31, 2017

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