The meeting of the Union Cabinet, which was scheduled to consider a 7 per cent hike in dearness allowance to 80 lakh central government employees and pensioners, has been put off to next week.
“The Cabinet, CCEA (Cabinet Committee on Economic Affairs) and CCI (Cabinet Committee on Infrastructure) meetings scheduled for Friday, have been postponed,” an official announcement said.
Cabinet meetings usually take place on Thursdays, but they have been postponed apparently in view of the rapid political developments in the aftermath of the government’s decision to hike diesel prices and operationalise its earlier move to allow foreign direct investment (FDI) in multi- brand retail.
Increasing DA from 65 per cent to 72 per cent to provide relief to 50 lakh central government employees and 30 lakh pensioners was on the agenda of the meeting. It is now likely to be taken up next week.
Once approved, the hike in dearness allowance will be effective from July 1, 2012, and the employees would be entitled to arrears from that date.
The additional burden on exchequer on account of increase in DA would be around 5,000 crore for the eight-month period between July, 2012 and February, 2013. It will be Rs. 7,400 crore for the full financial year.
The government had last increased DA in March this year from 58 per cent to 65 per cent, which was effective from January 1, 2012.
The government periodically hikes the DA, which is linked to consumer price index for industrial workers.
The consumer price index (CPI) based on movement in retail prices, soared to 10.03 per cent in August, from 9.86 per cent in July.