With the economy showing signs of returning to a growth path, the government is not concerned about keeping to fiscal deficit targets, despite the additional expenditure on account of implementing one-rank-one-pension (OROP) and the latest Pay Commission recommendations, Finance Minister Arun Jaitley said on Friday.
"Normally, when Pay Commission recommendations are implemented, salaries and pensions put pressure on the budgetary limit of 2.5 percent under these heads that financial planners follow," Jaitley said, addressing the Hindustan Times Leadership Summit, here.
"This pressure on the fiscal deficit will move up in the initial 2-3 years of the salaries, pension payments. But the economy is also growing, with it the base of the GDP...so the government's capacity to absorb expenditure is also increasing," Jaitley said.
In this connection, the finance minister said that while the Indian model of development is now much more market oriented than earlier, a large part of government revenues needs to go to fund social sector programmes for poverty alleviation in a country where over 30 percent of people live below the poverty line.