New Delhi , September 16
In a pre-festive season bonanza, the Union Cabinet on Thursday cleared the proposal for a 10 per cent hike in the Dearness Allowance (DA) for the Central government employees and pensioners.

With the hike in the dearness allowance - effective from July 1 2010 - DA would be 45 per cent of the basic pay and would benefit about 88 lakh employees and pensioners.

The increase is in accordance with the formula devised by the Sixth Pay Commission to compensate for price rise.

The Union Cabinet at its meeting chaired by Prime Minister Manmohan Singh also approved the introduction of the Multi-State Co-operative Societies (Amendment) Bill, 2010 in the Parliament, besides approving amendments to the Forward Contracts (Regulation) Act 1952 by introducing the Forward Contracts (Regulation) Amendment Bill, 2010 in the Parliament.

The decision to provide higher DA to employees will cost the exchequer an additional Rs 9,303.2 crore per annum, an official spokesperson said after a meeting of the Union Cabinet, where it was decided to raise the allowance.

The new DA will be paid to Central government employees and pensioners with effect from July 1, 2010, and the burden during the current fiscal has been estimated at Rs 6,202.1 crore.

The last time the increase was affected in March 2010, when the DA was increased by 8 per cent over and above the existing 27 per cent.

The existing rate of DA, which is paid as percentage of basic pay to compensate employees for the rising cost of living, is 35 per cent.

Inflation stood at 8.5 per cent in August, while food inflation is hovering above 15 per cent, according to the new WPI indices.

The increase in DA comes ahead of the Dussehra and Diwali festivals in October and November, respectively.

In the other decisions the Union Cabinet approved the introduction of the Multi-State Co-operative Societies (Amendment) Bill, 2010 in the Parliament which are intended to enhance the public faith in the cooperatives and to ensure better accountability of the management towards its members and the law of the land.

It is proposed to define active member to ensure the member’s active participation in the affairs of the society. Time bound decision by the society for admitting members is proposed to prevent inordinate delay by the society in admitting members.

A clause is proposed to be inserted for ensuring that the members make their payment due to the society to be eligible for exercising their rights as a member. It is proposed to allow the MSCS to refund full or part of the share capital subscribed by the Government to reduce/eliminate Government control of these cooperatives.

It also approved amendments to the Forward Contracts (Regulation) Act 1952 by introducing the Forward Contracts (Regulation) Amendment Bill, 2010 in the Parliament.

After the Bill is passed and enacted by the Parliament, Forward Markets Commission (FMC) as a regulator will get autonomy and power to regulate the market effectively.

New Products like ‘options’ will be allowed in the commodity market. This will benefit various stakeholders including the farmers to take benefit of ‘price discovery’ and ‘price risk management’.