Cabinet says yes to 6% hike in DA

NEW DELHI: The Union Cabinet on Thursday approved a 6% hike in dearness allowance entitlement of central government employees.

The increase would be applicable on a retrospective basis from July 1, 2007. The hike in dearness allowance would increase the allowance of central government employees from 35% to 41%, parliamentary affairs minister PR Dasmunshi told reporters.

The government revises dearness allowance for its employees twice every year, in January and July. The revision is carried out on the basis of movement in the consumer price index for industrial workers (CPI-IW). The proposal also entails a rise in dearness relief for pensioners.

The combined impact on the exchequer on account of both dearness allowance and dearness relief could be Rs 3,284.94 crore in a full year and Rs 2,189.96 crore in the financial year 2007-08.

The Centre had last revised dearness allowance in March by 6% over the existing allowance of 29%.

Mr Dasmunshi said the Cabinet also approved the Aam Aadmi Bima Yojana covering death and disability insurance for the benefit of rural landless households. A Rs 1,000-crore fund would be created by the Centre towards its share of premium payment. The fund would be managed by Life Insurance Corporation of India (LIC).

The annual premium payable per member is Rs 200 of which 50% would be paid by the Centre and 50% by state governments. A separate Rs 500-crore fund will also be created for the purpose of providing scholarships to the children of the beneficiaries.

As per the National Sample Survey, the number of rural landless households in the country is 1.5 crore, he said, adding that the government hoped to cover 70-80 lakh such households.