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Another week of reforms? Cabinet may scrap subsidy on PDS sugar


Barely a week after the government hiked the price of diesel and announced a string of reforms, including relaxing foreign direct investment rules in aviation and multi-brand retail, the Union Cabinet, which meets today evening, is likely to discuss scrapping the subsidy on levy sugar under PDS quota, raising the price of the commodity to Rs 23 per kg from Rs 13.50 per kg.

The price of levy sugar has been unchanged for the past 10 years.

The cabinet is also likely to consider hiking the dearness allowance of government employees by 7 percentage points—from 65 per cent to 72 per cent—of the basic pay.

The move will benefit about 50 lakh of its employees and 30 lakh pensioners, on Friday.

The hike, once approved, will be effective from July 1, 2012, and employees would be entitled for arrears from this date.

The government had increased dearness allowance last in March from 58 per cent to 65 per cent, which was effective from January 1, 2012.

Another important agenda is likely to be the restructuring of over Rs 2 trillion debt to state electricity boards.

Reforms in the life insurance sector are also likely to be taken up for discussion. Finance Minister P. Chidambaram is likely to meet the Insurance Regulatory and Development Authority on Wednesday.

The discussions could include taxation of life insurance policies and pension products, revival of unit linked insurance plans, faster regulatory approval for new products, and open architecture on bancassurance, among others.

With inputs from agencies

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