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Deccan Herald » National » Full Story

Cabinet okays DA merger

Central government employees will get an additional DA instalment at the rate of 2 per cent over the existing rate of 59 per cent from January 1 this year.

The Union Cabinet on Friday approved the Finance Minister’s proposal to merge Dearness Allowance (DA) to the extent of 50 per cent of pay with the basic pay of the Central government employees on the basis of recommendation of the Fifth Pay Commission.

Currently the Central government employees are getting DA at the rate of 59 per cent of the basic pay. With effect from April 1 this year DA to the extent of 50 per cent of the basic pay will be merged with pay and the remaining 9 per cent would continue as DA to be paid on basic pay and Dearness Pay as per the old formula.

The Fifth Pay Commission had recommended that DA should be converted into Dearness Pay each time the consumer price index goes up by 50 per cent over the basic index used by the last Pay Commission and such DA should be termed as Dearness Pay and be counted for all purposes including retirement benefits.

The Cabinet also approved release of an additional instalment of DA to Central government employees and Dearness Relief (DR) to pensioners as due from January 1 this year in cash at the rate of 2 per cent over the existing rate of 59 per cent.

From April 1 this year 50 per cent of such DA/DR would be converted to Dearness Pay/Pension Relief and DA/DR from such date would be payable at 11 per cent.
Finance Minister Jaswant Singh in his Interim Budget 2004-05 had announced that the government having re-examined this recommendations in depth had decided to merge DA to the extent of 50 per cent of pay with the basic pay from April 1, 2004.

“The matter was considered earlier by the Cabinet and was not accepted because it entailed financial implications of about Rs 2,500 crore per annum. The financial position has since improved and the staff side had also been demanding implementation of this recommendation. Keeping these factors in view the Cabinet today accepted the Fifth Pay Commission recommendation on DA merger,” an official spokesperson told newspersons after the Cabinet meeting.

The merger of DA/DR equal to 50 per cent of the existing basic pay/pension respectively with basic pay/pension will be shown distinctly as Dearness Pay (DP) and Dearness Pension with effect from April 1, 2004. This will be counted for all purposes like payment of allowances, transfer grant and retirement benefits.

However, the entitlement for LTC (Leave Travel Concession), Travelling Allowance (TA)/Daily Allowance (DA) while on tour and transfer, government accommodation would continue to be governed on the basis of basic pay alone without taking into account Dearness Pay.

The combined impact on exchequer on account of merger of DA/DR would be Rs 729.62 crore in a full year. However for the financial year 2004-05 it will be Rs 851.22 crore.

The additional implications on account of increase of DA will be estimated at Rs 525.62 crore per annum and for the financial year 2004-05 Rs 613.22 crore.
In case of increase of DR to pensioners the additional financial implications will be Rs 204 crore per annum and for the financial year 2004-05 it will be Rs 238 crore.

Rural electrification

With an eye on forthcoming general election, the Cabinet also approved a Rs 6,000-crore programme to electrify one lakh villages covering one crore households within the next two years by merging three existing power schemes.
It approved the merger of Accelerated Rural Electrification Programme (AREP), Kutir Jyoti Yojana and rural electrification component of the Prime Minister’s Grameen Yojana into a new two-year scheme of accelerated electrification, Parliamentary Affairs Minister Sushma Swaraj told newspersons.

The Cabinet also decided that a village would be considered electrified if a minimum of 10 households have power supply.

The “Accelerated Electrification of One Lakh Villages and One Crore Households Scheme” will involve an expenditure of Rs 6,000 crore of which 40 per cent will be provided as subsidy and the balance as loan to be extended by financial institutions from their own resources.

The Cabinet also approved a Rs 1,865-crore Polio Eradication Programme to enable the country to be declared as “polio free” by the WHO by 2006, Ms Swaraj said.

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