Days after millions of Central government employees got second installment of arrears arising from implementation of the Sixth Pay Commission, they are set to get more money.
The Cabinet on Thursday is expected to take a decision to increase dearness allowance by 5 per cent from July 1, 2009.
If cleared, around 5 million employees and 3.8 million pensioners will benefit. It will cause an additional burden of approximately Rs 2,600 crore (Rs 260 billion) till December 2009.
In February, the government had raised the DA by 6 per cent with a total outgo of Rs 5,160 crore for the year beginning January 2009.
The proposal has come at the time when the Finance Ministry has asked all Central government ministries to cut its non-plan expenditure by 15 per cent to combat rising fiscal deficit.
The Cabinet is also expected to discuss the issue of gay rights upholding the decision of the Delhi High Court that consensual sex between gays above the age of 18 should not be illegal. The Centre has to present its view on the issue in the Supreme Court on a petition filed by religious gurus like Baba Ramdev, who have challenged the high court decision.
A proposal to provide interest subvention of 1 per cent on home loans up to Rs 10 lakh is also expected to be taken up. The move is aimed at giving stimulus to the real estate sector.
The Cabinet is also expected to consider a scheme for providing short-term crop loans at a rate 2 per cent lower to farmers, reeling under drought.
The interest subvention scheme, estimated to cost the exchequer Rs 2,011 crore, is also likely to be discussed.