The chamber expressed fear that given a tight fiscal situation where there is a pressure of meeting the fiscal deficit target and the huge increase in the wage bill, the development expenditure would take a big bit, making the investment scenario worse.

However, Minister of State for Finance Jayant Sinha had earlier said he was confident that the government will stick to fiscal consolidation laid out in the Budget.

"While the chamber has no reason to disbelieve the Finance Ministry's assertion that the extra burden of Rs 1.02 lakh crore would not lead to increase in the fiscal deficit threshold of 3.9 pct in FY 2016 and 3.5 pct in 2017, the question remains then how are the government finances going to be fixed," Assocham said.

Moreover, it said, it would be wrong to reckon the salary bill either from the total budget/total revenue receipts or revenue expenditure.

The recommendations that will benefit 47 lakh central government employees and 52 lakh pensioners will lead to an additional outgo of Rs 73,650 crore from the Union Budget and Rs 28,450 crore from the Railway Budget.

Given the state of the global economy and demand slowdown, it cannot be stated with confidence that the economy would take a turn for a huge improvement in the next four months to coincide with the implementation of the Pay Commission report, the chamber noted.

The suggested wage increase by the 7th Pay Commission, if accepted, will come into effect from January 1, 2016.

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