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The Union Cabinet on Wednesday approved an increase of 3 percentage points on the Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners from the existing rate of 31% to 34%.
The DA hike will come into effect from 1 January.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be about ₹9,544 crore per annum, the government said in a statement. This will benefit about 47.68 lakh central government employees and 68.62 lakh pensioners.
The increase in Dearness Allowance has come as a relief for the central government employees amid the rising prices of petrol, diesel and increasing inflation.
The hike will also apply to civilian employees paid from the Defence Services, while in respect of Armed Forces personnel and Railway employees, separate orders will be issued by the Defence and Railways Ministry, respectively.
In October last year, the Cabinet had hiked the two allowances by 3% to 31%. It was effective from July 1, 2021.
Before that in July, the government had restored the dearness allowance and dearness relief and increased the rate of allowance from 17 per cent to 28 per cent.
Because of the Covid-19 pandemic, the central government had frozen the three additional instalments of the DA and DR, which were due on January 1, 2020; July 1, 2020; and January 1, 2021.
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