NEW DELHI, Feb 20 (UNI) The cabinet today put its seal of approval on the interim budget proposal for merger of 50 per cent Dearness Allowance (DA) of central government employees with the basic pay.
"At present, DA is being paid at 59 per cent of the basic pay.
With effect from April 1, 2004, da to the extent of 50 per cent of basic salary will be merged with pay and the remaining nine per cent will continue as da to be paid on the basic pay and dearness pay as per the old formula," parliamentary affairs minister Sushma Swaraj told newspersons after the cabinet meeting.
The cabinet also approved the release of additional DA and Dearness Relief (DR) installment to central government employees and pensioners as due from January 1, 2004 in cash at 2 per cent over the existing rate of 59 per cent.
"The result of the cabinet decisions will be that the existing basic pay and pension of all central government employees and pensioners will increase by 4.5 per cent.
The pecuniary benefit on future instalments of DA and DR would go up by 50 per cent.
Entitlement for other allowances like HRA will also increase.
"The central government employees and pensioners will become entitled to higher amount of DA and DR respectively with effect from April 1, 2004,' Swaraj said.
The combined impact on the exchequer on account of DA and DR would be Rs 729.62 crore in a full year.
However, for the financial year 2004-05 it will be Rs 851.22 crore.
The additional implication on account of increae of DA has been estimated at Rs 525.62 crore per annum and for financial year 2004-05 at Rs 613.22 crore.
In the case of DR to pensioners, the additional financial implication will be Rs 204 crore per annum and for financial year 2004-05 it will be Rs 238 crore.