Dearness Allowance (DA) hike for central govt employees effective from this month

Dearness Allowance (DA) for central government employees has been hiked to 31% of the basic pay from 28%with effect from July 1, 2021, the Finance Ministry stated on Tuesday. In an office memorandum, the Department of Expenditure, under the Finance Ministry, said the term ‘basic pay’ means the pay drawn as per the 7th pay commission matrix and does not include any other type of pay like special pay, etc.

“….the Dearness Allowance payable to central government employees shall be enhanced from the existing rate of 28 per cent to 31 per cent of the basic pay with effect from July 1, 2021,” said the office memorandum dated October 25.

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. The Union Cabinet last week approved an increase of 3 percentage points on the Dearness Allowance (DA) Dearness Relief (DR) for central government employees and pensioners from 28%.

After this hike, the DA will increase to 31%. The hike comes into effect from 1 July, 2021, announced union minister Anurag Thakur in a press briefing in New Delhi. The new hike comes just days ahead of Diwali and is aimed to benefit over 47 lakh employees and 68.62 lakh pensioners. The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.9,488.70 crore per annum, the government said in a statement.

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The DA and DR instalments are due for four periods namely January 1, 2020, July 1, 2020, January 1, 2021 and July 1, 2021. The government had frozen all such hikes last year as coronavirus had dented its revenue. The DA hike for central government employees is likely to cost the government about Rs 34,400 crore annually.

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