The Centre has approved two proposals that would enable its employees and farmers to have more money in hand.
The Cabinet also approved additional central assistance to the tune of Rs 5,000 crore for reconstructing infrastructure damaged by natural calamities in 2005 in Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu and UP.
Besides approving a six per cent raise in dearness allowance of nearly 33 lakh employees, the Union Cabinet also cleared the release of Rs 2,615 crore as interest subvention to banks for short-term credit to farmers.
The government will give the money to financial institutions, including public sector banks, regional rural banks, cooperative banks and Nabard, for refinance to rural and cooperative banks at concessional rates and reimburse the amount of interest subvention. The plan was aimed at ensuring that farmers get short-term crop loans at 7 per cent, subject to an upper limit of Rs 3 lakh.
The decision to raise dearness allowance for employees and dearness relief for pensioners was taken at the Cabinet meeting, said Information and Broadcasting Minister Priya Ranjan Dasmunsi.
They would be entitled to higher amount of allowance with effect from January 1, 2008. The combined impact of the decision on the exchequer till February next year would be Rs 3846.66 crore.