Pay panel proposals to fuel inflation: RBI

While stating that a fall in global crude oil prices and a normal monsoon could help contain inflation around five per cent by the end of FY17, RBI maintained that the implementation of the Seventh Pay Commi-ssion recommendation could put an upward pressure on inflation for a period of one to two years.

“Since September 2015 onwards, we have some information on pay commission awards and we have to see how it is implemented and who implements it and their timings. RBI will adjust the forecast path as and when more clarity emerges on the timing of implementation,” said RBI governor Raghuram Rajan.

While awaiting further data on the development of inflation, he said that RBI would be looking for structural reforms in the forthcoming Union Budget that could boost growth.