New Delhi: The Union Government on Thursday announced grant of five per cent additional dearness allowance for its employees with retrospective effect from July 1.

It also decided to ease the hardships of employees of 15 sick public sector enterprises (PSEs) by clearing their six-month salary arrears. The decision was taken at a meeting of the Cabinet, presided over by Prime Minister Manmohan Singh.

The decision is expected to cost the exchequer an additional Rs. 1858.15 crore in the current fiscal. The clearance of salary arrears will mean an additional burden of Rs. 124.37 crore.

An official spokesperson said the decision was expected to provide relief to over 10 million employees and pensioners. Trade unions, however, felt that the increase should have been higher to match the inflationary pressures on the economy.

The additional financial implication of the increase in DA and dearness relief is estimated at Rs. 2787.15 crore in a full year and Rs. 1858.15 crore for the remaining eight months of the current fiscal - 2006-2007.

The DA hike would cost an estimated Rs. 1259.25 crore for the eight months of the current fiscal and Rs. 1888.8 crore for a full year. In addition, the dearness relief to pensioners would cost an estimated Rs. 598.9 crore for the current financial year and Rs. 898.35 crore per annum.

The spokesperson said the decision to clear salary arrears, taken at a meeting of the Cabinet Committee on Economic Affairs, envisaged release of dues for the period between January 1, 2006 and June 30, 2006.

The public sector enterprises whose employees will benefit are: Andrew Yule and Company, Bharat Heavy Plates and Vessels Limited, Burn Standard Company, Bharat Wagon Engineering, Hindustan Cables, HMT (Machinery Tools), HMT (Watches), Hindustan Photo Films, Instrumentation Limited, Nepa Limited, Triveni Structurals HMT (Chinar Watches), HMT (Holding), National Instruments Limited and Tungabhadra Steel Products Limited.

Addressing a press conference, Heavy Industries Minister Sontosh Mohan Deb said budgetary support for the sick PSEs, amounting to Rs. 901 crore, had been given four times in October 2004, June 2005, October 2005 and May 2006.

He said the Government was providing funds pending consideration of the future of these PSEs so that their operations were not affected. The non-settlement of these liabilities had been causing hardship to the employees. This led to further deterioration of the companies' performance. At the same time, he noted that since the first budgetary support was given in October 2004, some PSEs had begun paying wages on their own.

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