‘Implementation of pay panel recommendations boosted spending’

The implementation of the Sixth Pay Commission recommendations during the thick of global recession provided enormous amount of money to consumers in the public sector,thereby boosting the domestic spending capacity to an extent,said Reserve Bank of India deputy governor Subir Gokarn.

Delivering a lecture on ‘Long Term Drivers and Risks in the Indian Economy: A Post-Crisis Perspective’ on the occasion of the ICFAI silver jubilee here on Thursday,he said the massive liquidity infusion and recognising the importance of the crisis helped the government formulate vital polices to curb the impact.

Gokarn said that India needed to change its agriculture produce pattern in order to sustain the growing inflation. “Inflation is not completely linked with monsoons,in fact over the past few years with income levels rising diet patterns of average Indian has changed. We have to ensure that India produces more food.”

He said the meltdown had badly hit the manufacturing industry,but it has begun to recover.