Just ahead of early polls, Central government employees are likely to see a jump in their income with a proposed merger of 50 per cent of their dearness allowance with their basic pay.
According to officials, the move would entail a 5 per cent increase in the wage bill of the government and would cost the exchequer less than Rs 1,000 crore (Rs 10 billion) a year. The merger of DA with basic pay follows a recommendation of the Fifth Pay Commission.
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At present, Central government employees earn 59 per cent DA on their basic pay. The formula will add the 50 per cent to their basic pay and leave DA at the level of nine per cent.
This will immediately raise the House Rent Allowance and other allowances of the employees as these are calibrated to their basic pay. It will also benefit those who are retiring as the base for calculation of their last pay will stand revised upwards.
While there is a strong demand for setting up a Sixth Pay Commission, which would extend the feel-good factor amongst the 3.5 million Central government employees, the sources said the merger of DA with basic salary would make the setting up of the Sixth Pay Commission redundant.
Several Cabinet ministers, including Tourism Minister Jagmohan, have lobbied for the merger of DA with the basic pay particularly in view of early elections. For the government, the move will help regain the vote bank among the government salaried employees.
The fall in the interest rates, setting up of the Expenditure Reforms Commission and the consequent introduction of Voluntary Separation Scheme for government employees plus the cancellation of Leave Travel Assistance had created an unfriendly image of the government among these people.
The government had for some time been resisting the demand on the plea that the other recommendations of the Fifth Pay Commission, including reduction in staff strength by 33 per cent and curtailment of leave, should also be implemented simultaneously.
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