The Union Cabinet headed by Prime Minister Narendra Modi on Friday approved increasing dearness allowance for central government employees to 21 per cent of basic pay from 17 per cent of basic pay with effect from January 1, 2020, Union Minister Prakash Javadekar told reporters in New Delhi.
The move is likely to benefit 48 lakh employees and 65 lakh pensioners, Mr Javadekar said. The move will be beneficial for 1.13 crore families, he said.
The hike in dearness allowance will cost the government additional Rs 14,595 crore, he added.
Prime Minister Modi's government had implemented 7th Pay Commission in January 2016, the salaries were then hiked and now with increase in dearness allowance the move is likely to benefit employees, Mr Javadekar said.
Dearness Allowance is granted to employees of the central government each year with effect from January 1 and July 1 and is paid in the month of March and September respectively. It is calculated on the basis of a rise in inflation and increase in prices of essential commodities.
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