The Cabinet on Friday approved a hike in the dearness allowance (DA) and dearness relief for Central government employees and pensioners by 4 per cent, to 42 per cent, with effect from January 1, 2023. The new DA rate will be applicable for the entire FY24, beginning April, as well, I&B Minister Anurag Thakur said in a briefing after the Cabinet meeting.

The Committee on Economic Affairs (CCEA) also approved a subsidy of ₹200 per 14.2 kg cylinder for up to 12 refills per year to be provided to beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) and raised the minimum support price for raw jute for 2023-24 season to ₹5,050 per quintal.

Benefit to many

The combined impact on the exchequer on account of both dearness allowance and dearness relief would be ₹12,815.60 crore per annum. This will benefit about 47.58 lakh Central government employees and 69.76 lakh pensioners. The total cost to the Centre for FY24, as well as January and February 2023, will be around ₹14,951.52 crore.

This increase is in accordance with the accepted formula which is based on the recommendations of the 7th Central Pay Commission, Thakur said.

Gas subsidy

As on March 1, 2023, there are about 9.59 crore PMUY beneficiaries. Thus, the total expenditure on account of the subsidy will be ₹6,100 crore for FY23 and ₹7,680 crore for FY24.

The subsidy is credited directly to the bank accounts of eligible beneficiaries. Public sector oil marketing companies — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation — have already been providing this subsidy since May 22, 2022.

MSP hike

The fixation of MSP of raw jute (TD-3 equivalent to earlier TD-5 grade) at ₹5,050 per quintal for 2023-24 season would ensure a return of 63.20 per cent over the all India weighted average cost of production. The announced MSP is in line with the principle of fixing the MSP at a level of at least 1.5 times all India weighted average cost of production as announced by the government in the Budget 2018-19.