7th CPC to put pressure on inflation in next 2 years : RBI

The central government employees are ardently waiting for the implementation of the 7th Pay Commission as a final date has yet not been decided for the same.

RBI in a report on Monday has revealed something which is a bit worrisome as well as brings some good news. The report reveals that implementation of the 7CPC will put an upward pressure of 1-1.5 per cent on inflation, but is expected to boost GDP by around 40 bps (basis points increase) during the current fiscal, RBI said in a report today.

At the same time, the central bank remained confident of meeting its March 2017 retail inflation target of 5 per cent. "Assuming that the government implements the 7th Pay commission recommendations by the second quarter of 2016-17, CPI (Consumer Price Index) inflation could be, on average, 100-150 bps higher than the baseline in 2016-17.

Its impact is expected to persist up to 24 months," Governor Raghuram Rajan said in the a report released along with the monetary policy document.

The report, however, noted that the pay hike will boost GDP by around 40 bps during the current fiscal. The pay hike impact will also jack up food prices, the report said, adding that "food prices could