DA Hike: Government Approves 3% Increase In Dearness Allowance For Central Government Employees
Central government employees and pensioners are set to receive a Diwali bonus. The Union Cabinet has approved a 3% increase in dearness allowance (DA) and dearness relief (DR) during its meeting on Wednesday, announced Union Minister Ashwini Vaishnaw.
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 DA and DR would be Rs 9,448.35 crore per annum.
This will benefit about 49.18 lakh central government employees and 64.89 lakh pensioners.
This decision confirms the report from NDTV Profit last week, which cited employee unions anticipating the DA and DR hike. Although a revision was expected to be approved in the Cabinet's meeting on Oct. 9, employees and pensioners had to wait a bit longer for confirmation.
The new increase raises the DA from 50% to 53% of the basic salary, effective from July1, 2024. The revision will cost the exchequer Rs 9,448 crore annually. This biannual adjustment, which affects approximately one crore employees and pensioners, aims to alleviate the impact of inflation.
Earlier this year in March, the government had increased the dearness allowance by 4%, effective from January 2024. The last revision had raised the allowance from 46% to 50% of the basic pay.
The DA is calculated based on the average of the All India Consumer Price Index over the past 12 months, making it a vital factor in determining government salaries and pensions.
According to the 7th Pay Commission report, several allowances, including house rent allowance (HRA), are eligible for automatic revision once the DA reaches 50% of basic pay. These allowances were adjusted earlier this year, as confirmed by the Confederation of Central Government Employees. However, there has been no increase in the basic pay, as such a recommendation was not included in the final 7th Pay Commission report.
In public sector employment, basic salaries are determined according to established pay scales, with various additional components calculated against the basic salary to arrive at the final take-home pay. The dearness allowance is one of the key components in this calculation.
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