June 28, 2017 / 2:14 PM / 24 days ago

India raises allowances for government employees, pensioners

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NEW DELHI, June 28 (Reuters) - India's cabinet on Wednesday approved raising allowances of government employees and pensioners, a move that is expected to boost consumer demand but strain public finances.

The one-off increase, to be effective from July 1, is estimated to cost the federal exchequer 307.4 billion rupees ($4.76 billion) per annum, Finance Minister Arun Jaitley told reporters after the cabinet meeting.

While higher allowances will benefit millions of public sector workers, they are expected to fuel demand-driven price pressures, posing an upside risk to the central bank's inflation projections.

$1 = 64.5300 Indian rupees Reporting by Rajesh Kumar Singh; Editing by Malini Menon

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