The Hindu : How much will they get?

Online edition of India's National Newspaper
Sunday, Feb 22, 2004

National

National

How much will they get?

By Sushma Ramachandran

NEW DELHI, FEB. 21. The financial bonanza doled out to Central Government employees will largely benefit those without accommodation who are getting a 30 per cent house rent allowance (HRA). The merger of 50 per cent dearness allowance with the basic pay will mean that an employee getting a basic pay of Rs. 5,000 a month now will hereafter have a basic of Rs. 7,500 with Dearness Allowance at nine per cent.

The merger itself does not lead to any net increase but the 30 per cent HRA will now be computed at Rs. 7,500 a month rather than at Rs. 5,000 a month, giving a benefit of Rs. 750 a month. In addition, there will be an increase of about Rs. 100 due to the fresh two per cent DA instalment.

The other major beneficiaries will be those who retire during the next fiscal — 2004-05 — as their pension will be computed on the basis of the basic pay plus merged DA. Pension is based on the average salary drawn during the last 10 months in service but retirees next year will be given this special dispensation.

The net effect of the windfall on the exchequer was estimated at Rs. 4,000 crores in a single year when the interim budget was announced but with the additional two per cent DA instalment, this is likely to go up to Rs. 4,750 crores.

This may be offset by the higher income tax revenue of about Rs. 500 crores, bringing the net impact to Rs. 4250 crores annually.

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