Indian Sovereign Rating is Stable-Moody

The rating agency, Moody's Investors Services on 26 September 2012 in its Outlook for India expected stability due to the newly announced reforms (FDI & hike in petrol rates). It believed that these reforms will help India in pairing up of the fiscal deficits. Indian sovereign credit rating outlook was kept by the agency at Baa3 for the medium term. 

Sovereign Risk Group at Moody's, vice-president, Atsi Sheth said that the nations target may exceed the fiscal deficit due to the reforms being practiced. He also predicted that the gross fiscal deficit of India can overshoot the estimated target of 5.1 percent of the GDP proposed for the fiscal year 2012-13 that will end in March.

Whereas, the outlook to India by the rating agencies Fitch and Standard & Poor’s was negative, where the two agencies showed concerns towards the pace of reforms going on in India along with the economic downfall.

Service Tax on high-end class travel, freight and auxiliary service rail fares

The new Railway Minister C.P. Joshi and the Finance Minister P. Chidambaram in their meeting held on 26 September 2012 came up with the decision to regulate service taxes on high-end passenger classes like AC along with freight and auxiliary services provided by the railways. The taxation will be in effect from 1 October 2012. Implementation of the taxes will help the exchequer in generating estimated revenue of Rs 3100 Crore annually.

Percentage increase in the fair chart for different segments is as follows:

• First Class - 7 percent
• Air-conditioned - 3.708 percent
• Freight charges - 3.708 per cent
• Auxiliary services at stations – 12.36 percent
• The fair for high-end passengers have been increased by 30 percent

Busy route surcharge during busy season of maximum 10 percent varying from commodity to commodity on freight will also come on effect from 1 October 2012. This step will help in winning an additional sum of Rs 826 crore in upcoming six months for the railways.

Union Cabinet of India approved the Demands of Ex-servicemen for One Rank One Pension

The Union Cabinet of India, under the Chairmanship of Prime Minister Manmohan Singh on 24 September 2012 approved the long awaited demand for One Rank One Pension (OROP) and other benefits of ex-servicemen. The cabinet also gave a nod for enhancement of pension for family and dual family pension. The approved demand will cost the government about Rs 2300 crore per year.
The cabinet also approved family pension grants for mentally or physically challenged children of personnel from armed forces.
Issue
The ex-servicemen association and defence forces demanded payment of uniform pension to the defence personnel retiring at same rank with same length of service period irrespective of their date of retirement. The OROP also demanded passing of future enhancements to the past pensioners.
The cabinet approved following things on the issue of one rank one pension:
To bridge the gap created between the pension of the JCO/OR retirees as per the pre 1 January 2006 and post 1 January 2006 after determining the pensions of the pre 1 January retirees.
The gap will be bridged on the basis of estimated maximum for ranks and groups among the three categories of services following the case of the post retirees. The weightage for qualifying into the service for Naik, Sepoy and Havaldar ranks would be increased by two years in case of both pre and post retirees.
For the pre- 1 January 2006, commissioned officer pensioners the pensions will be decided after referring to the minimum of the fitment table for the ranks in place of the minimum of the pay band. In relation to the family pension, the cabinet in its decision stated that the pensions of the pre- 1 January 2006 retirees like Honorary Commissioned Officers, Commissioned Officers, JCOs/Ors will be decided following the fitment table instead of the minimum pay-band.
For establishment of links with the family in cases, where death of the JCOs/ORs have occurred after the retirement than the dependants of the pensioner will be entitled for 60 percent of the determined pension incases the normal family pensions can be calculated to be 30 percent of the last pay drawn by the pensioner. In cases, where the pension is decided on the basis of ranks, length of service and group of employment, the normal family pensions after the death of JCOs/ORs will be 60 percent of the determined pension on notional basis.
Dual family pension
The cabinet also made its stand clear that in cases, the dual family pension will be allowed in both present and future scenario, where the pensioners drew or is drawing or will draw the pension for both the civil employment as well as for the military service. In cases of the family pension for mentally/physically challenged children, the family pension scheme will continue even after the marriage for those who are drawing or drew or may draw the pensions.
Panel report
The approval of the Union Cabinet came on the OROP after the six member committee formed by the Prime Minister submitted its report. Ajit Seth was the head of this committee.

Dearness Allowance (DA) hiked for Union Government Employees

The Union government on 24 September 2012,  hiked Dearness Allowance (DA) by 7%, benefiting its 80 lakh employees and pensioners and costing the exchequer an additional Rs7,408 crore annually. With the dearness allowance the pension proposals for personnel of armed forces is also allowed now.

The hike in the DA from 65% to 72% will cost the exchequer Rs4939 crore for the remaining part of the current financial year. The annual burden on account of the DA increase is estimated at Rs7408 crore.

It is going to benefit about 50 lakh employees and 30 lakh pensioners of the
central government. The decision was made by the government to compensate its employees and pensioners for general price rise.
The increase in DA is in accordance with the accepted formula which is based on the recommendations of the 6th Central Pay Commission.

The government had increased DA in March this year from 58% to 65%, which was effective from January 1; 2012.The government periodically hikes the DA, which is linked to consumer price index for industrial workers.

Dearness allowance (DA) is calculated as a percentage of an Indian person's basic salary and was introduced to alleviate against the impact of inflation upon low income earners.

Both pensioners and their families are granted DA and this continues following reemployment with the Central or State Government, a Government undertaking, an autonomous body or a local body.