The Cabinet today approved a 10% hike in dearness allowance (DA) of central government employees and pensioners. Besides, it asked the seventh pay commission to look into the issue of merger of 50% DA with the basic pay of the employees and the retired staff. The commission may give interim recommendations as well.
The Cabinet, meanwhile, deferred decisions on anti-corruption ordinances, as well as the one on giving wide-ranging powers to Sebi to curb ponzi schemes. The Cabinet might hold a special meeting tomorrow to take a call on these ordinances.
With the decision to hike DA, the allowance will be 100% of the basic pay against 90% at present, sources said. The decision will be effective from January.
The move, which will benefit 50 lakh employees and 30 lakh pensioners, comes ahead of elections. Once model code of conduct kicks in, the government will not be able to take these decisions. However, the government does give hike in DA to its employees twice a year. The government had announced a hike of 10 percentage points to 90% in September last year, effective from July 1, 2013.
The government uses Consumer Price Index- Industrial Workers data of the past 12 months to arrive at a raise in DA.
Terms of reference (ToR) of 7th pay commission:
The Cabinet asked the commission, constituted recently under the chairmanship of former Supreme Court judge Ashok Kumar Mathur, to look into the feasibility of merging 50% DA with the basic pay. This is part of ToR of the commission.
The commission was asked to examine, review, evolve and recommend emoluments structure including pay, allowances etc of central government employees. The employees of regulatory bodies, except RBI, set up under Acts of Parliament would also be covered.
It was also asked to examine the existing schemes of payment of bonus.
The commission may consider, if necessary, sending interim reports on any of the matters as and when the recommendations are finalised.
Hike in urea cost:
The Cabinet Committee on Economic Affairs cleared a hike in fixed cost of urea by up to Rs 350 per tonne, a move that would lead to increase in subsidy by about Rs 900 crore.
For urea plants, the fixed cost mainly includes salary & wages, contract labour, repair $@$# maintenance and selling expenses.
The fixed cost of urea was increased in line with the recommendations of the the Group of Ministers (GoM). The minimum fixed cost, including the hike, should be Rs 2,300 per tonnes under the New Pricing Scheme (NPS) III. In the case of plants which are more than 30 years old, they will be given additional Rs 150 per tonne.
The CCEA also approved changes to the policy that aims at encouraging new investment in the urea sector by removing 'guaranteed buyback' clause that assured buyback of urea for eight years from start of production.
Other changes in the policy include insertion of a provision of bank guarantee of Rs 300 crore from companies keen to set urea plants under this policy.
Government will provide subsidy on sale of urea produced from the new plants.
The NIP policy was notified in January last year to incentivise firms to invest in the urea sector and reduce dependence on imports.
The 'guaranteed buyback' provision had to be amended in the policy as government had received 13 investment proposals entailing capacity addition of 16 million tonne mainly due to this clause. The proposed capacity addition by the applicants was more than double the actual requirement, forcing the Fertiliser Ministry to have a second thought on this clause.
Urea production in the country is stagnant at 22 million tonnes and the gap of 8 million tonnes is met through imports. So far, about 4 million tonnes of urea has been imported.
Additional compensation to FACT
The CCEA approved continuation of additional compensation to state-run FACT for for producing complex fertilisers using Naphtha as feedstock for a specific period under the Nutrient Based Subsidy policy.
"The approval has been given by the Cabinet Cabinet Committee on Economic Affairs (CCEA) to extend the additional grant for a period from June 30 to October 4 of the financial year 2013-14," a statement said.
Earlier this policy was applicable initially for a maximum period of two years with effect April 1, 2010.
The company was expected to use LNG gas as feedstock for production of ammonia or start using imported ammonia. As some of the reasons for delay in conversion of feedstock from naphtha to gas were beyond the control of company, so the
Fertiliser Ministry proposed to extend the additional subsidy for FACT.
The period of eligibility for additional compensation was extended to June 2013 in case of Fertilizers and Chemicals Travancore Limited (FACT) only in view of its preparedness for conversion of its feedstock to gas within a definite time frame. FACT has successfully migrated to using LNG as feedstock from October 5, 2013. Accordingly, continuation of additional compensation to FACT beyond June 30, 2013 was required and has now been approved by the Cabinet.
These additional funds will compensate FACT for having manufactured and supplied P$@$#K fertilisers to the domestic market by using costlier feedstock (Naphtha) prior to migration to LNG.
Rise in ceiling of election expenditure:
The Cabinet revised the limit of election expenditure incurred by a candidate for parliamentary constituencies to Rs 70 lakh from Rs 40 lakh at present. However, it raised to Rs 54 lakh from the present Rs 22 lakh in Arunachal Pradesh, Goa, Sikkim, Andaman & Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Lakshdweep and Puducherry.
This is due to the increase in the number of electors, polling stations as well as the increase in the cost inflation index.
In case of assembly constituencies, the maximum limit has been increased to Rs 28 lakh. It has been hiked to Rs 20 lakh in Arunachal Pradesh, Goa, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Puducherry.
The election commission had written to the Law Ministry proposing a raise in expenditure. The proposal was cleared by the Cabinet today.
Meanwhile, the decision came in for sharp criticism from West Bengal Chief Minister Mamata Banerjee. She said it would only help large political parties with enough cash and encourage corruption and black money.
Other decisions:
i) Approval to financial support of Rs 434 crore for establishing four new National Institutes of Design (NID) at Jorhat (Assam), Bhopal (Madhya Pradesh), Vijayawada (Andhra Pradesh) and Kurukshetra (Haryana).
ii) Clearance to settting up International Fund for Agricultural Development (IFAD) country office in India
iii) Gave nod to revised cost estimate of Rs 2,962.78 crore or completing the scope of the development programme of Geo-synchronus Satellite Launch Vehicle (GSLV Mk-lll) and to carry out anexperimental flight called LVM3-X against original estimation of Rs 2,498.00 crore.
iv) Approval for the National Mission for Sustaining Himalayan Ecosystem launched under the National Action Plan on Climate Change.
v) Okayed continuation of the Integrated Child Protection Scheme (ICPS) in the XII Plan. The total financial implication for the XII Plan period would be Rs 3,000.33 crore, which includes a Central share of Rs. 2350 crore and a State share of Rs. 650.33 crore.
vi) Approved financial assistance for HMT Machine Tools Limited (HMT MTL), which will hit the exchequer by Rs 136.04 crore. This includes Rs 75 crore as non-plan loan for working capital purposes, implementation of 1997 pay revision from the date of approval, waiver of interest on Government loan for Rs.38.58 crore.
