Fear not the Sixth Pay Commission

Some sort of panic has gripped economic commentators as the Sixth Pay Commission award draws nearer. There is talk that this will again deal a crippling blow to public finances.

I don't think so. I think the improvement in both central and state finances has been sufficiently impressive that we can withstand the impact of any SPC award. But, also, as I point out in my
latest ET column, Booming Sensex, smiling GoI, the government could easily mobilise the extra funds needed through disinvestment.

True, the unions and the Left oppose disinvestment. But this opposition can be overcome. I argue, by linking a generous award with: a. approval for disinvestment and b. assurance (if necessary by legislation) that government equity in PSUs will not be allowed to fall below 51% consequent to dinsvestment.

By holding on its to investment in PSUs and public sector banks, the government has ended up a big winner from the rise in the Sensex- and don't forget it was the Left that forced the government to hold on!