Good news for 50 lakh central government employees and over 60 lakh pensioners, the Centre on Wednesday approved a proposal to hike Dearness Allowance (DA) by 3% to 34% of basic pay, effective 1 January 2022.
The proposal was approved by the Union Cabinet which met under the chairmanship of Prime Minister Narendra Modi. The increase is in accordance with the accepted formula, based on the recommendation of the 7th Central Pay Commission, as per a government statement.
The increased in allowance will help employees part mitigate the impact of the erosion in their purchasing power following rising inflation. India’s retail, or the consumer price, inflation has remained above the upper-end of the Reserve Bank of India’s upper target of 6% for two months now amid a surge in oil prices are due to the Ukraine-Russia conflict.
The combined impact on the exchequer on account of increases in DA and DR will be Rs 9,544.50 crore per annum. Dearness relief or DR is the quantum of amount provided to pensioners. Dearness allowance was hiked by 3% to 3% in October last year.
DA is a component of the monthly salary paid to government employees to compensate for increased cost of living due to inflation. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, the Cabinet said.
After the latest hike, central government employees will get a 34 per cent Dearness Allowance calculated by multiplying the current rate of DA by the base salary of the employee. If this calculation is done, the latest DA hike will result in an increase of the gross salary by up to Rs 20,000.
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Dearness Allowance or DA is the cost-of-living adjustment allowance that the government pays to offset the impact of inflation. It is paid to both public sector employees as well as pensioners.
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