Govt hikes DA for 80L staff, pensioners

To win the favour of 50 lakh employees and 30 lakh pensioners ahead of the polls, the Union Cabinet on Friday decided to raise their Dearness Allowance (DA) from 90 to 100 per cent and mandated the Seventh Pay Commission to revise their salaries.

The Congress-led UPA government took the decision at what was possibly the last meeting of the Union Cabinet before Election Commission announces election dates early next week - thereby placing a restriction on such measures through the model code of conduct.

Implementing the Pay Commission’s recommendations may take at least two years, but the Dearness Allowance (DA) increase, as well as an identical increase in Dearness Relief (DR) will be effective from January this year.

This is the second double-digit DA hike in a row - the government had announced a 10 per cent hike in September last year, effective from July 2013. DA is cost of living adjustment allowance for state employees and pensioners.

The DA and DR burden on the exchequer is likely to be Rs 11,075 crore per annum.

Initially it will be Rs 12,921 crore for the 14-month period ranging January 2014 to February 2015.

The decision on the mandate of the Pay Commission will result in the benefit of improved pay and allowances as well as rationalization of the pay structure in case of Central Government employees and other employees, an official statement said.

The Commission headed by former Supreme Court Judge Ashok Kumar Mathur has been given 18 months time to submit its report.

It will “examine, review, evolve and recommend changes that are desirable and feasible” regarding the principles that should govern the emoluments structure including pay, allowances and other facilities or benefits of government employees.

In another election-bound decision, the cabinet cleared a proposal to ensure Rs 1,000 minimum monthly pension under a scheme of retirement fund body Employee Provident Fund Organisation. The move will immediately benefit about 28 lakh pensioners including five lakh widows.

The government would have to provide an additional Rs 1,217 crore to ensure the minimum pension of Rs 1,000 starting 2014-15. Pensioners will get the benefit with effect from April 1.