The Union Cabinet on Wednesday hiked Dearness Allowance (DA) by 2 percent, in what seems to be a huge relief for almost half a crore government employees. The Union Cabinet, headed by Prime Minister Narendra Modi, approved the proposal this evening. As mentioned earlier, at least 50 lakh CG employees and over 55 lakh pensioners will benefit from the hike. It may be noted that DA is given to staffers and pensioners to counter the effects of inflation on their earnings.
As per information, the Union Cabinet today increased the dearness allowance (DA) for its 11 million employees and pensioners to 7 percent, from 5 percent, from January 1, 2018.
“The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners from January 1, 2018 representing an increase of 2 percent over the existing rate of 5 percent of the Basic Pay/Pension, to compensate for price rise,” an official statement said.
According to the statement, the hike will benefit about 48.41 lakh central government employees and 61.17 lakh pensioners.
It said that the combined impact on the exchequer on account of both DA and DR would be Rs 6,077.72 crore per annum, and Rs 7,090.68 crore in 2018-19 (for a period of 14 months from January 2018 to February 2019). This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, it added.
Earlier last year, the government hiked DA by 6 percent to 125 percent of basic pay. The DA was later merged into the basic pay following the implementation of the 7th Pay Commission award. At present, the Central government employees and pensioners are entitled to 2 per cent dearness allowance, which was effected from July 1, 2016.