Fitch Doubts Modi Budget as $15 Billion Salary Boost Hurts Bonds
- Finance panel recommends 24% increase in government salaries
- Moody's says fiscal challenges constrain India's credit rating
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A proposal to increase the salaries of millions of Indian civil servants risks derailing the government’s budget deficit goal, adding to pressure on bonds suffering the biggest outflows since May.
The 23.55 percent overall boost recommended by a government-appointed panel on Nov. 19 would cost the exchequer 1.02 trillion rupees ($15.4 billion) in the year starting April 1, Finance Minister Arun Jaitley estimates. Such a raise, along with increased economic stimulus spending, would make it harder to meet fiscal targets, Fitch Ratings said.