The Hindu : New norms sought for fixing DA

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Saturday, Oct 19, 2002

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New norms sought for fixing DA

By Our Special Correspondent

The Chief Ministers of Gujarat and Chattisgarh, Narendra Modi, and Ajit Jogi, at a meeting on `Fiscal Situation of States' in New Delhi on Friday. — Photo: V. V. Krishnan

NEW DELHI OCT. 18. At the meeting of Chief Ministers on the fiscal situation of the States, convened by the Prime Minister, Atal Behari Vajpayee, here today, many Chief Ministers advocated the freezing of dearness allowance and bonus for Central and State Government employees while some others sought a consensus on the issue. There were some rare voices in favour of not freezing these benefits and finally, a decision on this issue was deferred.

The Tamil Nadu Chief Minister, Jayalalithaa, was the most vocal when she said ``the distress has to be shared. Employees cannot expect increases in emoluments as a routine, when States are floundering to meet their obligations to the poor. Are we elected into office merely to guarantee an ever increasing share of the cake to those privileged to have it in the first place? Are we to remain mute spectators, wringing our hands in helplessness, while we watch the social safety net dismantled'' the Chief Minister said.

Calling for new norms to fix dearness allowance based on capacity to pay, Ms. Jayalalithaa said those in Government service were already pre-empting a lion's share of the available resources and all the incremental resources were being deployed to keep those in Government service satisfied.

Holding a different view, the Karnataka Chief Minister, S.M. Krishna, maintained that ``the solution is not to stop further DA, but to delink State Government salaries from those of the Central Government and to fix scales depending upon each State's capacity to pay.'' Mr. Krishna was not present and his speech was read out at the meeting.

The Assam Chief Minister, Tarun Gogoi, said his State was not in a position to bear the extra burden of DA. ``If the Centre decides to go ahead with releasing the DA instalment, then the Centre will have to bear the extra burden,'' he said.

The Madhya Pradesh Chief Minister, Digvijay Singh, criticised the Centre for not taking effective steps towards fiscal reforms saying ``first, the Centre should take steps towards fiscal reforms before asking States to take hard measures.

As far as DA freeze is concerned, we already have an agreement with trade unions and have frozen it till April 2004,'' he said, adding that the Centre should take steps to improve tax efficiency and increase the tax-GDP ratio to bring about an improvement in overall fiscal situation.

Talking to presspersons after the meeting, the Orissa Chief Minister, Naveen Patnaik said ``while no decision has been taken so far on the freezing of DA, in my opinion the proposal should be implemented. I would suggest DA should be frozen for a few years,'' he said and pointed out that Orissa was calamity prone and had a large number of people living below the poverty line.

Expressing a different view, the Himachal Pradesh Chief Minister, P. K. Dhumal said ``I don't agree with the view to freeze DA of the employees as it will only amount to postponing of DA. Even otherwise, DA payment will have a minor impact on the fiscal situation,'' he added.

Mr. Dhumal said the Centre should consider writing off of loans which have been given to the States for their economic infrastructure and the Government should also consider a softer interest regime for the States.

The Haryana Chief Minister, Om Prakash Chautala, said that while no decision was taken on the issues discussed at the meeting including DA freeze, it was a good opportunity for the States to discuss the fiscal situation of the country.

There was agreement on three issues, namely, transfer of Centrally-sponsored schemes with funds going to the State consolidated fund for on-ward time-bound transfer, implementation of Value Added Tax (VAT) from April 1, 2003 and the Supreme Court order on payscales of subordinate judiciary.

On the debt swapping issue, while most States were in agreement in principle, they demanded alteration in the terms and conditions.

The Madhya Pradesh Chief Minister made the point that while the Centre could spend Rs.18,000 crores to cover wrong investments of the Unit Trust of India (UTI) and additional Rs.20,000 crores to commercial banks for diluting non-performing assets but not for addressing the problem of States' debt.

Even the external aid which came to States at zero per cent interest gets converted into loans by the Centre, causing tremendous hardship to the States, Mr. Singh said.

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