New Delhi: The union government today cleared release of an additional 2% of dearness allowance (DA) to its employees and dearness relief (DR) to pensioners from 1 July. The latest DA hike is meant to make up for the increase in cost of living is over the existing rate of 7% of the basic pay or pension. The latest news will benefit about 4.84 million central government employees and 6.2 million pensioners, said an official statement.
The DA hike will set back the exchequer by ₹ 6,112.2 crore a year. For the rest of the current financial year, from 1 July, the impact would be ₹ 4,074.8 crore. This increase is based on the recommendations of the 7th Pay Commission.
The Union Cabinet had in March increased DA for government employees and pensioners to 7% from 5%, with effect from 1 January 2018. That DA hike was in accordance with a formula based on the recommendations of the 7th Pay Commission for central government employees.
The government also decided to raise the outlay for the proposed India Post Payments Bank (IPPB), meant to increase financial inclusion, by about 80% to ₹ 1,435 crore from ₹ 800 crore. The increase is meant to cover cost relating to technology and manpower. IPPB, a payments bank which seeks to increase access to banking services in rural areas, will have 650 branches across the country, one in every district.
The Cabinet decision comes less than a week before IPPB’s launch on 1 September by Prime Minister Narendra Modi.
A payments bank is a differentiated bank providing a limited range of products, such as acceptance of demand deposits and remittance of funds. It can accept a restricted deposit, which is currently limited to ₹ 1 lakh per customer. However, these banks cannot issue loans and credit cards. The other payments banks that have started operations are Airtel Payments Bank Ltd, Paytm Payments Bank Ltd and Fino Payments Bank Ltd.
IPPB will also open 3,250 customer access points in 650 districts along with doorstep banking facility, communications minister Manoj Sinha said earlier this month.
With an aim to bridge the last-mile gap in banking services, IPPB will deploy around 300,000 postmen and gramin dak sewaks carrying mobile phones and biometric devices to offer doorstep banking to customers, predominantly in rural areas. By December, all 155,000 post offices in the country are likely to be linked to the IPPB system. This will also step up the number of rural bank branches in India significantly.
IPPB will offer a range of products such as savings and current accounts, money transfer, direct benefit transfer, bill and utility payments and enterprise and merchant payments. Customers will be able to access these products and related services across various channels—counter services, Micro ATM, mobile banking app, text messages and phone calls.
The government also announced a few ocean development schemes which include services for fishermen, setting up observatories for tracking marine pollution, purchase of two specialised research vessels and technology development for deep ocean mining. The government allocated ₹ 1,623 crore for a bunch of schemes to be implemented by 2019-20.
Srishti Choudhary contributed to this story.