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(adsbygoogle = window.adsbygoogle || []).push({}); Helping Hand For India's Middle Class, Government Raises Dearness Allowance - Algeria latest news

To ease some pressure on the middle class, the government has increased a key allowance for nearly 50 lakh government employees and an equal number of pensioners.

The Dearness Allowance will escalate by 6 per cent, union minister Ravi Shankar Prasad said today, describing the hike as "a Holi gift". The allowance is meant to help counter the pressures of inflation. The hike will cost the government an additional Rs. 14,725 crore.

The move comes ahead of elections in five important states like Bengal and Tamil Nadu, and at a time when the salaried middle class is struggling with rising education, housing and health care costs.

The government has been concerned about whether that will affect Prime Minister Narendra Modi's popularity among the middle class, traditionally a strong supporter of the ruling BJP.

Underlining the government's sensitivity to a "squeeze" on the middle class, earlier this month it agreed to roll back plans to tax pension fund withdrawals following a backlash from salaried workers.

"Spending on my son's education and medicine for the family has gone up sharply," said Sambuddha Banerjee, a 47-year-old IT professional, who works for the local government in Kolkata, to news agency Reuters. "The government also cut fuel subsidies and tried to impose taxes on our pension savings. This is not acceptable."

The BJP swept to power in 2014 with promises of economic reforms and pro-business policies that appealed to aspirational Indians in big towns and cities.

"Rising prices of commodities and services which have a higher weight in the consumption basket of middle class households is an issue that cannot be ignored," said a senior Finance Ministry official to Reuters.

Owners of motorcycles and cars are upset that the government has taken away some windfall gains from falling oil prices in the form of taxes, and people across the country are cutting back on discretionary spending as expenses outstrip earnings.

Despite the complaints, some say PM Modi must get more time to address their concerns. "Our expectations of him were very high, and he needs more time to solve these age-old problems," said Kundan Mukherjee, a 51-year-old from Jharkhand, who works for a pharmaceutical company.

Tag(s) : #Asia-Pacific

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