Cost of living allowance raised 6 percentage points; to cost exchequer Rs 6,000 crore.
The Union Cabinet today approved a hefty 6 percentage point increase in the cost of living allowance, earlier called Dearness Allowance (DA), from 16 to 22 per cent of basic pay. The new rates will be effective for 14 months from January 1 this year to February 2010, and the Centre will take a hit of Rs 6,020 crore.
Home Minister P Chidambaram told reporters after the Cabinet meeting, the second this week, that Rs 4,100 crore will be on account of dearness relief to government employees and the remaining Rs 1,920 crore will be given to pensioners,
The additional allowance will cover 8.3 million central government employees and pensioners. The payout will begin from March 1 this year. At present, there are 4.5 million central government employees, including defence and para military forces, and over 3.8 million pensioners.
Today's announcements come just two days after Finance Minister Pranab Mukherjee announced a two percentage point cut in excise duty and service tax that will cost the exchequer Rs 29,100 crore. In addition, a previous four percentage point cut in excise duty was also extended beyond March 31, 2009.
Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) today gave its approval for upgrading more than 7,500 km of roads in 33 districts in eight states — Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa and Maharashtra, all of which are afflicted by Naxalite violence — and Uttar Pradesh. The total cost of these projects is estimated at Rs 7,300 crore.
A senior government official said the government has given approval to more than 20 road projects in the past three months.
Apart from 1,320 km of national highways, the projects would also include more than 6,000 km of state highways and rural roadways.
The CCEA also approved the upgrade of 264 km of roads from two to four lane on the Build Operate Transfer (BOT) basis at a total project cost of Rs 8,436 crore. Approval was also given to five projects in Kerala and Tamil Nadu to be expanded to four lanes under NHDP Phase III. Being developed on a BOT basis on stretches like Kannur-Vengalam and Vengalam-Kuttipuram, the development of the total length of 411 km of roads would entail a cost of Rs 8,159 crore, including cost of land acquisition and resettlement and rehabilitation.
