Arun jaitley
India's Finance Minister Arun Jaitley speaks at an Economist conference in New Delhi, India, Sept. 9 2015 [Representational Image].Reuters

Finance Minister Arun Jaitley said on Friday that funds worth Rs 1.10 lakh crore have to be included in the upcoming budget for the implementation of the One Rank One Pension (OROP) and 7th Pay Commission recommendations.

"During the financial year 2016-17, the central government has to make provision for about Rs 1.10 lakh crore in order to meet the liabilities on account of implementation of 7th Pay Commission recommendations and One Rank One Pension (OROP) Scheme," Jaitley told the Press Trust of India.

The minister expressed confidence that the government would be able to meet the fiscal deficit target in the current financial year. While India currently remains one of the fastest growing economies in the world, the country has the "potential" to grow at much higher rate, he said.

"The world economy is passing through an uncertain and fragile situation... The silver lining is low international commodities and oil prices which in turn has helped in better macroeconomic situation of the country," Jaitley added.

In November last year, the Seventh Pay Commission, headed by Justice A K Mathur, had recommended a 16 percent hike in basic salary and a 63 percent increase in allowances for the central government employees, taking the overall hike in salaries to 23.55 percent.

The government's expenditure on salary payments to employees will go up by a whopping over Rs 1 lakh crore on implementation of the commission's proposals. The increase in the government's salary bill is expected to weigh in on its efforts to bring down the country's fiscal deficit.

However, the increase in salaries is expected to boost consumption levels in the country, thereby making a positive contribution to the Indian economy.