Hike in dearness allowance of Central Govt employees may be considered by cabinet

New Delhi: The Union Cabinet is expected to meet this evening to consider a 7 per cent hike in the Dearness Allowance (DA) of Central government employees.

Once approved, it will benefit over 52 lakh government employees.

Also, a bailout package for state power distribution companies is on the cards. The Cabinet is likely to consider a proposal for debt recasting of power distribution companies.

The meetings of the Cabinet Committee on Economic Affairs (CCEA) and Cabinet Committee on Infrastructure (CCI), scheduled for Friday, were postponed apparently in view of the rapid political developments in the aftermath of the government’s decision to hike diesel prices and operationalise its earlier move to allow Foreign Direct Investment (FDI) in multi- brand retail.

The hike in dearness allowance will be effective from July 1, 2012, and the employees would be entitled to arrears from that date.

The additional burden on exchequer on account of increase in DA would be around Rs. 5,000 crore for the eight-month period between July, 2012 and February, 2013. It will be Rs. 7,400 crore for the full financial year.

The government had last increased DA in March this year from 58 per cent to 65 per cent, which was effective from January 1, 2012. It will now be increased to 72 per cent.

The government periodically hikes the DA, which is linked to consumer price index for industrial workers. The consumer price index (CPI) based on movement in retail prices, soared to 10.03 per cent in August, from 9.86 per cent in July.

(With PTI inputs)

Source: www.ndtv.com

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