The Union Cabinet on Wednesday approved an additional 2 per cent hike in Dearness Allowance (DA) for Central government employees. The hike will come into effect from July 1, 2018.
The Cabinet, chaired by Prime Minister Narendra Modi has also approved to release an additional instalment of Dearness Relief (DR) to pensioners. The additional hike of 2 per cent is over the existing rate of 7 per cent of the Basic Pay or Pension, to compensate for the price rise.
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 6112.20 crore per annum and Rs.4074.80 crore in the financial year 2018-19 (for a period of 8 months from July 2018 to February 2019).
The Cabinet decision will benefit about 48.41 lakh Central Government employees and 62.03 lakh pensioners.
The increase is in accordance with the accepted formula, based on the recommendations of the 7th Central Pay Commission.
Earlier in January 2018, the Cabinet had increased the DA for its 11 million employees and pensioners to 7 per cent, from 5 per cent. “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 per cent over the existing rate of 5 per cent of the Basic Pay/Pension, to compensate for price rise,” an official statement had said in January.