Union Cabinet Approves Key Policy Decisions on Economic Growth and Infrastructure
The Union Cabinet, chaired by Prime Minister Narendra Modi, approved several key policy decisions on Friday. These measures aim to enhance economic growth, infrastructure, and welfare initiatives across the country.
Economic and Welfare Reforms
Dearness Allowance Hike for Government Employees
To support government employees and pensioners, the Cabinet approved a 2% hike in Dearness Allowance (DA) and Dearness Relief (DR), effective January 1, 2025. As a result, DA now stands at 55% of basic pay/pension, benefiting around 48.66 lakh employees and 66.55 lakh pensioners.
This move will impose an additional burden of Rs 6,614.04 crore on the exchequer and aligns with the recommendations of the 7th Central Pay Commission. Furthermore, this increase aims to improve the financial security of government employees.
Read more: Cabinet approves 2% Dearness Allowance hike for central government employees
Boosting Manufacturing and Investments
PLI Scheme to Boost Electronics Manufacturing
A Production-Linked Incentive (PLI) scheme worth Rs 22,919 crore has been approved to strengthen domestic manufacturing of passive electronic components. This initiative is expected to:
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Create 91,600 direct jobs
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Attract Rs 59,350 crore in investments
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Generate production worth Rs 4.56 lakh crore over six years
Additionally, the scheme will integrate Indian companies into Global Value Chains (GVCs) and support industries such as telecom, consumer electronics, automobiles, medical devices, and the power sector.
Agriculture and Rural Development
Subsidy for Fertilisers in Kharif 2025
To ensure 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).
Key highlights of this decision include:
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Retail prices for Di-ammonium Phosphate (DAP) will remain unchanged.
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The allocation is Rs 13,000 crore higher than the Rabi season 2024-25.
This decision will help maintain stable fertiliser prices, ensuring that farmers can access necessary agricultural inputs without financial strain.
Irrigation and Water Management
Irrigation Boost with Bihar’s Kosi-Mechi Link Project
The Cabinet has approved the inclusion of the Kosi-Mechi Intra-State Link Project of Bihar under the PMKSY-AIBP (Pradhan Mantri Krishi Sinchai Yojana-Accelerated Irrigation Benefits Programme).
Project details:
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Total cost: Rs 6,282.32 crore
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Central assistance: Rs 3,652.56 crore
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Objective: Divert surplus Kosi water for irrigation in Bihar’s Mahananda basin
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Expected completion: March 2029
Notably, this initiative aims to improve irrigation facilities and flood control measures in the region, benefiting thousands of farmers.
Infrastructure and Connectivity Enhancements
Patna-Sasaram Corridor to Improve Bihar’s Road Connectivity
The Cabinet has approved a four-lane access-controlled corridor between Patna and Sasaram, Bihar, at a cost of Rs 3,712.40 crore.
Project benefits:
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Developed under the Hybrid Annuity Model (HAM)
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120.10 km project with both greenfield and brownfield highway development
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Expected to reduce travel time between Patna, Arrah, and Sasaram
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Key towns benefiting: Arrah, Grahini, Piro, Bikramganj, Mokar, and Sasaram
This project will significantly improve regional connectivity, thereby boosting economic activities and trade.
Read more about India’s Infrastructure Developments
Conclusion
By implementing these policies, the government aims to drive economic progress, support key industries, and enhance infrastructure development across India. Furthermore, these reforms are expected to improve the lives of millions, strengthening India’s position in the global economy.
