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The Union Cabinet, under the leadership of Prime Minister Narendra Modi, has recently approved a series of crucial policy decisions aimed at bolstering economic growth, enhancing infrastructure development, and promoting welfare initiatives across the nation. These decisions, encompassing a hike in dearness allowance, incentives for manufacturing, agricultural subsidies, irrigation projects, and road infrastructure improvements, reflect the government's commitment to addressing key sectors and improving the lives of its citizens. The approval of these measures signals a proactive approach to navigating economic challenges and capitalizing on opportunities for growth and development.
One of the most significant decisions is the approval of a 2% hike in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, effective January 1, 2025. This revision brings the DA to 55% of basic pay or pension, benefiting approximately 48.66 lakh employees and 66.55 lakh pensioners. The financial implications of this decision are substantial, with an additional burden of Rs 6,614.04 crore on the exchequer. However, the government views this expenditure as a necessary investment in the well-being of its employees and pensioners, acknowledging their contributions to the nation's progress. The DA hike is also in line with the recommendations of the 7th Central Pay Commission, ensuring fairness and consistency in compensation policies.
In a bid to stimulate domestic manufacturing, the Cabinet has approved a Production-Linked Incentive (PLI) scheme worth Rs 22,919 crore for passive electronic components. This scheme is designed to incentivize companies to increase production, create jobs, and integrate into global value chains. The expected outcomes of the PLI scheme are impressive, with projections indicating the creation of 91,600 direct jobs and the attraction of Rs 59,350 crore in investment. Over a six-year period, the scheme aims to generate production worth Rs 4.56 lakh crore. The PLI scheme's impact is expected to be felt across various industries, including telecom, consumer electronics, automobiles, medical devices, and the power sector, fostering innovation and competitiveness in these critical areas.
Recognizing the importance of affordable fertilisers for farmers, the Cabinet has approved a Rs 37,216 crore subsidy for phosphatic and potassic (P&K) fertilisers for the upcoming Kharif season (April 1 – September 30, 2025). This subsidy aims to ensure that farmers have access to essential nutrients for their crops at reasonable prices, thereby supporting agricultural productivity and food security. The government has also assured that retail prices for Di-ammonium Phosphate (DAP) will remain unchanged, providing stability and predictability for farmers. The allocation for the Kharif season is Rs 13,000 crore higher than that for the Rabi season 2024-25, underscoring the government's commitment to supporting the agricultural sector.
The Cabinet's approval of incorporating the Kosi Mechi Intra-State Link Project of Bihar under PMKSY-AIBP (Pradhan Mantri Krishi Sinchai Yojana-Accelerated Irrigation Benefits Programme) is a significant step towards strengthening irrigation facilities and improving flood control measures in the region. This ambitious project, with a total cost of Rs 6,282.32 crore, includes Rs 3,652.56 crore in central assistance. The project aims to divert surplus Kosi water for irrigation in Bihar's Mahananda basin, addressing the critical need for water resources in the area. Scheduled for completion by March 2029, the project is expected to enhance irrigation and flood management, benefiting farmers and communities in the region.
Furthermore, the Cabinet has greenlit a four-lane access-controlled corridor between Patna and Sasaram, Bihar, at a cost of Rs 3,712.40 crore. This project, developed under the Hybrid Annuity Model (HAM), involves the construction of a 120.10 km corridor that includes both greenfield and brownfield highway development. The primary objective of this project is to ease congestion and improve connectivity between Patna, Arrah, and Sasaram, benefiting towns like Arrah, Grahini, Piro, Bikramganj, Mokar, and Sasaram. The improved infrastructure will significantly reduce travel time, facilitating trade, commerce, and economic activity in the region.
These policy decisions collectively demonstrate the government's commitment to sustainable economic growth and development. The DA hike provides financial relief to government employees and pensioners, while the PLI scheme aims to boost domestic manufacturing and create jobs. The fertiliser subsidy ensures that farmers have access to essential nutrients, and the irrigation and road infrastructure projects address critical needs in Bihar. By investing in these key sectors, the government is laying the foundation for a more prosperous and resilient nation. The coordinated approach across various sectors highlights a strategic vision for long-term sustainable growth and inclusive development, aiming to uplift communities and strengthen the national economy.
The decisions approved by the Union Cabinet extend beyond immediate financial relief and short-term gains; they represent a comprehensive approach to addressing long-standing challenges and fostering a conducive environment for sustained economic progress. The emphasis on infrastructure development, particularly in regions like Bihar, underscores the government's commitment to bridging regional disparities and promoting equitable growth. By investing in irrigation projects, road connectivity, and other essential infrastructure, the government aims to unlock the economic potential of these regions and improve the quality of life for their residents. The integration of the Kosi Mechi Intra-State Link Project into the PMKSY-AIBP program exemplifies the government's strategic approach to water resource management and agricultural development. This project not only enhances irrigation capabilities but also plays a crucial role in flood control, mitigating the devastating effects of natural disasters on vulnerable communities.
Moreover, the focus on promoting domestic manufacturing through the PLI scheme reflects a broader strategy of reducing dependence on imports and fostering self-reliance in key sectors. By incentivizing companies to increase production and integrate into global value chains, the government aims to create a more competitive and resilient manufacturing sector. The expected benefits of the PLI scheme, including job creation, investment attraction, and increased production, are substantial and will contribute significantly to the nation's economic growth. The scheme's targeted approach, focusing on specific industries such as telecom, consumer electronics, and medical devices, ensures that resources are allocated effectively and that the desired outcomes are achieved.
The government's commitment to supporting farmers through fertiliser subsidies is also a critical component of its overall strategy for agricultural development. By ensuring that farmers have access to affordable fertilisers, the government aims to enhance agricultural productivity and ensure food security for the nation. The decision to maintain stable retail prices for Di-ammonium Phosphate (DAP) provides predictability for farmers and helps them plan their planting schedules effectively. The increased allocation for the Kharif season underscores the government's recognition of the importance of the agricultural sector and its commitment to supporting farmers through challenging times.
The Cabinet's approval of the four-lane access-controlled corridor between Patna and Sasaram is a testament to the government's focus on improving connectivity and infrastructure across the country. This project, developed under the Hybrid Annuity Model (HAM), combines greenfield and brownfield highway development to create a modern and efficient transportation network. The reduced travel time between Patna, Arrah, and Sasaram will facilitate trade, commerce, and economic activity in the region, benefiting businesses and communities alike. The improved connectivity will also enhance access to essential services, such as healthcare and education, for residents in the area.
In addition to the specific projects and initiatives approved by the Cabinet, the overall policy framework reflects a commitment to fiscal responsibility and sustainable development. The government recognizes the importance of managing public finances prudently while also investing in key sectors that drive economic growth and improve the lives of citizens. The DA hike, while representing a significant financial burden on the exchequer, is viewed as a necessary investment in the well-being of government employees and pensioners. The PLI scheme and fertiliser subsidies are designed to generate long-term economic benefits that outweigh their initial costs. The infrastructure projects are carefully planned and executed to ensure that they are sustainable and environmentally responsible.
The decisions approved by the Union Cabinet are not isolated measures but rather part of a broader strategy for sustainable economic growth and inclusive development. The government's commitment to fiscal responsibility, infrastructure development, and support for key sectors such as agriculture and manufacturing demonstrates a holistic approach to addressing the challenges facing the nation. By investing in these areas, the government is laying the foundation for a more prosperous and resilient future for all citizens.
The interplay of these cabinet decisions reveals a multifaceted strategy designed to stimulate economic activity, enhance social welfare, and improve infrastructure across India. The increase in Dearness Allowance (DA) and Dearness Relief (DR) directly benefits a significant portion of the population, injecting purchasing power into the economy and improving the quality of life for government employees and pensioners. This measure, while seemingly straightforward, has ripple effects that extend to various sectors, boosting demand and supporting businesses.
The Production-Linked Incentive (PLI) scheme represents a more targeted approach, aimed at transforming India into a global manufacturing hub. By incentivizing domestic production of passive electronic components, the government seeks to reduce reliance on imports, create jobs, and attract foreign investment. This scheme is not just about increasing output; it's about building a robust and competitive ecosystem that can drive innovation and technological advancement. The emphasis on integrating Indian companies into Global Value Chains (GVCs) highlights the government's ambition to position India as a key player in the global economy.
The subsidy for phosphatic and potassic (P&K) fertilisers is a critical intervention that supports the agricultural sector and ensures food security. By keeping fertiliser prices affordable, the government helps farmers maintain productivity and avoid financial distress. This measure is particularly important for small and marginal farmers who may struggle to afford inputs without government support. The increased allocation for the Kharif season demonstrates the government's commitment to prioritizing agriculture and ensuring that farmers have the resources they need to succeed.
The approval of the Kosi Mechi Intra-State Link Project in Bihar and the four-lane access-controlled corridor between Patna and Sasaram reflects a focus on infrastructure development as a catalyst for economic growth and social progress. These projects not only improve connectivity and transportation but also create jobs, stimulate local economies, and enhance the overall quality of life for residents. The Kosi Mechi project, in particular, addresses critical issues of irrigation and flood control, making it a vital investment for the region.
Taken together, these cabinet decisions demonstrate a coordinated and comprehensive approach to economic development and social welfare. The government is not simply reacting to immediate challenges but is actively shaping the future by investing in key sectors, promoting innovation, and supporting vulnerable populations. The emphasis on long-term sustainability and inclusive growth is evident in the design of these policies, which are intended to benefit all segments of society. The success of these initiatives will depend on effective implementation and ongoing monitoring, but the overall direction is clear: India is committed to building a strong and prosperous future for its citizens.
Source: From DA hike to infrastructure projects: All the key decisions approved by cabinet