Cabinet clears 10% rise in DA

Pay panel to recommend on merger of 50% DA with basic pay; urea subsidy to increase by Rs 900 cr a year; poll spending ceilings also raised

The Union Cabinet on Friday approved a 10 per cent rise in dearness allowance (DA) for central government employees and pensioners. It also decided to ask the 7th  Pay Commission to look into the issue of merging 50 per cent DA with the basic pay of employees and retired staff, said a senior government official.

It deferred a decision on the proposed anti-corruption ordinances, as well as the one on giving wide-ranging powers  to the Securities and Exchange Board of India to curb ponzi schemes.

With the decision to raise DA, the allowance will be 100 per cent of the basic pay against 90 per cent at present, sources said. The decision will be effective from January. The move will benefit five million staffers and three million pensioners; it comes on the eve of the Lok Sabha poll schedule announcement. Once that is done, the model code of conduct takes effect, barring such decisions.

Normally, the government raises DA to its employees twice a year. It had announced an earlier 10 per cent rise in September last year, effective July 1, 2013. It uses Consumer Price Index-Industrial Workers data of the past 12 months to calculate the raise.

Pay panel

As for the merging of 50 per cent DA with basic pay, the Cabinet decided this would be part of the terms of reference for the Pay Commission, constituted recently under the chairmanship of former Supreme Court judge Ashok Kumar Mathur. The Commission has been asked to examine and recommend the emoluments structure — pay, allowances, etc — of central government employees. Staff of regulatory bodies set up under Acts of Parliament, except the Reserve Bank, would also be covered.

Poll spending rise

The Cabinet also revised the limit of election expenditure incurred by a candidate from parliamentary constituencies to Rs 70 lakh from Rs 40 lakh at present. It was 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. In the case of assembly constituencies, the maximum limit has been increased to Rs 28 lakh. For the smaller regions mentioned earlir, it is now up to Rs 20 lakh. The Election Commission had requested the rise.  The decision was criticised by West Bengal CM Mamata Banerjee. She said it would only help large political parties with enough cash, and encourage corruption and flow of unaccounted money.