The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday, October 9, approved a 5 per cent hike (over the existing rate of 12% of the Basic pay/Pension) in dearness allowance (DA) given to central government employees and pensioners. Calling it a "Diwali gift" to government employees, Union Minister Prakash Javadekar said that around 50 lakh central government employees and 62 lakh pensioners would benefit from the decision.
The development, which will be effective from July 2019, will be a major relief for the government employees. The move, announced by Prakash Javadekar after the cabinet meeting, comes amid an economic and synchronised slowdown.
The DA has been raised from 12 to 17 per cent to compensate for price rise and this will cost the government Rs 16,000 crore annually. Addressing the press conference, Javadekar said that previously DA had been raised by 2-3 per cent but this time it has been raised by 5 per cent in one go.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission. The additional financial implication on account of the Dearness Relief to pensioners is estimated to be Rs 7319.15 Crore per annum and Rs 4870 Crore in the current FY.
Dear Allowance/Dearness Relief is paid to Central Government employees/pensioners to offset the impact of inflation. DA is revised twice a year from 1st January and 1st July.