The Hindu Business Line : Cabinet clears DA hike for Govt staff

The Union Finance Minister, Mr P. Chidambaram, and the Defence Minister, Mr Pranab Mukherjee, coming out of the Prime Minister's Office with the Finance Secretary, Mr D.C. Gupta, and the Chief Economic Adviser, Mr Ashok Lahiri, after attending the Cabinet meeting at South Block, in New Delhi on Friday. - Shanker Chakravarty

New Delhi , Sept. 17

THE Cabinet today approved a three-percentage point increase of dearness allowance (DA) and dearness relief to Central Government employees and pensioners respectively. Thus the rate of DA from July 11 will be 14 per cent, up from the existing rate of 11 per cent.

The combined impact on the exchequer as a result of the increase in DA and dearness relief will be Rs 1,608.39 crore in a full year and Rs 1,072.38 crore for the financial year 2004-05.

Briefing newspersons, the Finance Minister, Mr P. Chidambaram, said, "The increase in DA has been due since July 1, 2004, and it is done through an established formula. This cannot be put off indefinitely."

`No worry over inflation': He brushed aside concerns that the rise in pay could stoke demand and lead to greater inflation, as Government employees constitute the biggest block of the country's organised work force.

The Minister also briefed the Cabinet on inflation, which fell to 7.81 per cent from 8.33 per cent. He said that there are adequate stocks of all essential commodities. "There is no need for price increase. There are adequate stocks of foodgrains, edible oil, pulses and sugar. We will ensure that there are no supply side constraints. Consumers should resist any increase in prices," Mr Chidambaram said.

Higher sugar availability: The Cabinet Committee on Prices today decided to increase the overall availability of sugar in the coming months, especially keeping in mind the festival season. Mr Chidambaram said that the Government would allow import of raw sugar with the obligation to re-export in 24 months. The Government has already rationalised the duty structure of edible oils, this will have a direct bearing on the prices of vanaspati, which uses imported crude palm oil as the main input. He said the Food Ministry had released an additional two lakh tonnes for domestic sales in the current month against 13 lakh tonnes already released , taking the total availability in the open market in September to 15 lakh tonnes.