INDIA BUSINESS WORLD - March 1^th - March 15^th - 2008

6% HIKE IN DA FOR CENTRAL GOVT STAFF, INCREASE TO BE APPLICABLE WITH RETROSPECTIVE EFFECT FROM JAN 1, COST RS 1,500 CR

Bringing festive cheer to 50 lakh central government employees ahead of Holi, the Cabinet has decided to increase the dearness allowance (DA) by 6 percentage points. A decision to increase the DA to 47% of gross salary from 41% earlier was taken by the Union Cabinet.

The hike will be applicable from January 1, 2008, which means that government employees will also get arrears. For the exchequer, the 6% hike would mean an additional burden of over Rs 1,500 crore. Last September, the government had increased DA from 35% to 41%.

The Cabinet also gave its approval for release of Rs 2,615 crore to state-owned banks and financial entities to ensure that farmers get short-term crop loans at subsidised rate of 7% during 2007-08. The decision would benefit farmers who avail short term crop loans up to Rs 3 lakh. The amount, to be released to PSU banks, regional rural banks, cooperative banks and Nabard, would be used to refinance to RRBs and cooperative banks at concessional rates so that farmers get short-term loans at 7%. The Centre gives 2% interest subvention for such loans.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) gave its approval for implementation of the polio eradication strategy with estimated expenditure of Rs 2,344.56 crore. The department of health and family welfare will be permitted to negotiate with the World Bank and other external funding agencies and access external funds in order to bridge the gap between total requirements and availability so that reliance on domestic budgetary resources could be reduced to the minimum.

The CCEA also cleared implementation of the central sector plan scheme of assistance to states and union territories for conducting 18th Livestock Census during the 11th Five-Year plan period (2007-12) with an outlay of Rs 301.34 crore. The funding will be done by the central government. The approval would help in the collection of detailed data on livestock, poultry, agricultural implements & machinery and fishery statistics and infrastructure related to these sectors and their computerisation and report publication. The Livestock Census data would provide the basis for planning and formulation of schemes aimed at bringing further development in the animal husbandry, poultry and fisheries sectors.