New Delhi: Ahead of elections in Delhi, Rajasthan and Madhya Pradesh, the Congress party-led United Progressive Alliance announced soft farm loans, relaxed the cut-off income criterion for other backward classes (OBCs), earmarked funds to modernize education in madrasas and approved higher- than-expected bonus payments to railway employees.
The cabinet also pushed ahead with incremental administrative reform. Taking a cue from the Sixth Pay Commission report, the cabinet snapped the link between the salary of the head of the pension regulator and the bureaucracy
Instead, the chairman of the Pension Fund Regulatory and Development Authority (PFRDA) could now be paid a higher salary, thereby increasing the possibility of attracting talent from the private sector.
The cabinet will re-issue an earlier resolution that provides for establishing PFRDA, as the pension legislation has not yet been cleared by the Parliament. One of the changes proposed while reissuing the resolution is to cut the tenure of the chairman and other board members from the current five years to two, or till a statutory PFRDA is in place, whichever is earlier.
Attracting talent: The Manmohan Singh-led government has also cleared a higher salary for the chairman of the pension fund regulator. Manvender Vashist / PTI
On Friday, the Union cabinet raised the income ceiling for OBCs from Rs2.5 lakh to Rs4.5 lakh—an increase of 80%—for them to avail of reservation benefits in education.
“OBC students are increasingly getting through institutes of higher education on merit and so there is a huge demand for seats from this class of people,” Congress general secretary B.K. Hariprasad said.
“We welcome this move as it will help the more poor among the OBCs (get) improved access to education,” said G. Devarajan, secretary of the All India Forward Bloc party.
However, asked whether the move would help the Congress gain votes in the forthcoming elections, Devarajan said it was unlikely as the party has lost its image among that section of the population since it kept the Mandal Commission report in “cold storage during Indira Gandhi’s rule”.
The cabinet committee on economic affairs also approved an expenditure of Rs325 crore to encourage madrasas, or Muslim religious schools, to introduce science and mathematics in addition to imparting Islamic education. It will, however, be optional and is expected to benefit 700,000 children and cover 6,000 such schools.
To cap the cost of farmers’ borrowings, the government raised the interest subsidy to public sector financial institutions to 3% from the current 2%. The cost of the total interest subsidy in 2008-09 will be Rs4,311 crore, said a government official, who wanted to remain anonymous.
“The actual experience of farmers is that banks are not giving them loans. There is a liquidity crunch in the agricultural sector,” said Prakash Javadekar, spokesman of the principal opposition party, the Bharatiya Janata Party.
The cabinet also partially offset the cost incurred by banks who participated in the Rs65,318 crore farm loan waiver and will reimburse them over four years beginning this year. The government has decided to pay banks Rs3,872 crore as interest over three years beginning July 2009. The banks will not get interest payments for the current fiscal year, when the government will reimburse Rs7,500 crore. Another Rs17,500 crore will be given this year to cooperatives and regional rural banks.
To make up for attrition, the government approved 1,896 new posts in the three arms of the defence forces from colonels to lieutenant generals and their equivalents.
Ruhi Tewari, Pallavi Singh and PTI contributed to this story.