In a move that will add up to Rs 10,000 crore (Rs 100 billion) to the government expenditure, Minister for Tourism Jagmohan has written to BJP President Venkiah Naidu asking him to ensure that the Fifth Pay Commissions' recommendation to convert dearness allowance of over 50 per cent into dearness pay is accepted by the government.
The present rate of dearness allowance is 59 per cent of the basic pay. If the proposal is accepted, the basic pay of the government employees would go up by 9 per cent of dearness allowance and house rent allowance, which is 30 per cent of the basic pay, would also go up significantly.
An employee with a basic pay of Rs 6,500 would stand to gain Rs 3,500 per month on account of the dearness allowance and HRA alone.
The total government wage bill in the last fiscal, when the dearness allowance was 40 per cent of the basic pay, was Rs 18,740 crore (Rs 187.40 billion).
A quick calculation shows that merely on account of the hike in dearness allowance and HRA, the additional outgo for the government would be around Rs 10,000 crore.
If the proposal is cleared, the BJP is likely to gain a major ground among the 3.5 million government servants.
Rather than writing to the finance minister, Jagmohan has approached the BJP high command to push the proposal through. Informal talks are reported to have taken place between him and Jaswant Singh over the weekend.
Finance ministry sources said the proposal had to come to the ministry from the Department of Personnel. The cost to the exchequer has not yet been ascertained.
The government has already accepted another request made by Jagmohan for providing some relief to pensioners by ensuring that their net earnings from interest remain same as prior to the reduction in general interest rates.
The Dada-Dadi bonds, announced by Finance Minister Jaswant Singh last week, provide for higher rates of interest to people over 60 years of age.
Jagmohan has also said the 5 per cent restriction on compassionate ground appointments imposed by the Supreme Court should be waived in case of Class III and Class IV employees.
Arguing that this clause caused hardship to lower income groups, particularly in case of the death of the earning government servant, the family is asked to vacate the government accommodation within a short time, he has said that the court is likely to accept the reasoning for removal of the restriction.
