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Karnataka opposes freezing of DA

Karnataka opposed freezing of dearness allowance to government employees but favoured redeployment of personnel and strict recruitment control to maintain financial discipline.

"The solution is not to stop further DA, but to delink state government salaries from those of the central government and to fix scales depending upon each state's capacity to pay", Karnataka Chief Minister S M Krishna told the meeting of the chief ministers on fiscal situation of the states.

Stating that Karnataka took a conscious decision not to implement the recommendations of the Fifth Pay Commission as also placed a strict recruitment control, he said as long as DA was increased based on inflation, there would be no pressing need for another Pay Commission.

Krishna, whose speech was read out in his absence, said it was necessary to allow taxation of both goods and services together under value added tax and to improve the tax buoyancy of the states, service taxation should he handed over to the States.

The Centre should also evolve a uniform legislation for implementation of VAT in all states, he said.

Welcoming the debt swap scheme, he, however, said implementing it from the current year by setting apart 20 per cent of the small savings loan might be difficult as most of the states have already taken into account the full small savings receipts towards financing of state plans.

From the next year, a fixed percentage of small savings receipts could be earmarked for debt swap, he said.

The Centre should reduce interest rate for all future repayments due on loans taken earlier, he said.

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