New Delhi: Over eight million central
government employees and pensioners will get an additional
five per cent dearness allowance that will hit the exchequer
by over Rs 2,900 crore this fiscal and Rs 4,355 crore in a
full year.
The decision to hike the dearness allowance (DA) for the
employees and dearness relief for pensioners just before the
festive season, taken at the cabinet meeting today, will
create additional demand and boost the economy which is being
impacted by an erratic monsoon.
The additonal DA, to be given with effect from July 1
this year, will help these employees and retired people
weather the impact of rising prices.
"The cabinet has decided to release an additional
instalment of DA to central government employees and DA to
pensioners...representing an increase of 5 per cent over the
existing rate of 22 per cent of the basic pay, pension to
compensate for price rise," Information and Broadcasting
Minister Ambika Soni told reporters after the Cabinet meeting.
Even as the wholesale price inflation remains in negative
zone for over three months in a row largely because of high
inflation in a year-ago period, the rate of price rise based
on retail prices of items consumed by industrial workers has
crossed double digits, according to latest figures.
Inflation based on Consumer Price Index for industrial
workers (CPI-IW) crossed the double-digit mark to touch 11.89
per cent in July, compared with 9.28 per cent in June, because
of the sharply rising food prices.
The CPI-IW is used for calculating DA given to central
government employees.
This is the second bonanza announced for the central
government employees and pensioners after the announcement the
second and last tranche of arrears of the sixth pay commission
recommendations. The payment of arrears will put an additional
burden of over Rs 17,500 crore on the exchequer.
The government`s finances are already facing the burden
of stimulus packages and a slowing down economy with fiscal
deficit is projected to touch 6.8 per cent of the GDP.
The Indian economy grew by 6.1 per cent in the first
quarter of this fiscal and Finance Minister Pranab Mukherjee
as well as many analysts expect the economy to grow at slower
pace in the coming two quarters due to the impact of a weak
monsoon.
Bureau Report
